Asia stocks mixed on US rates, tariff caution; China falls from recent peaks

Updates at 00:15 ET (04:15 GMT) with India open, Hong Kong and China losses 

Investing.com-- Asian stocks were a mixed bag on Tuesday as uncertainty over U.S. trade tariffs and interest rate cuts kept investors to the sidelines, while Chinese markets fell from recent peaks following mixed data for August. 

Regional markets saw a dearth of immediate trading cues following a U.S. market holiday on Monday. But S&P 500 Futures fell 0.1% in Asian trade as a legal challenge to President Donald Trump’s trade tariffs and uncertainty over an upcoming Federal Reserve meeting kept sentiment largely risk-averse. 

Focus is also on key U.S. nonfarm payrolls data due later this week, which is likely to factor into expectations for rate cuts. Markets were seen remaining largely geared towards a September cut, despite sticky inflation data released last week.

The prospect of lower U.S. interest rates had supported Asian stocks through August, and offered some support in recent sessions. 

Japan’s Nikkei 225 rose 0.5%, while the TOPIX index added 0.7%. 

South Korea’s KOSPI was the best performer in Asia, rising 0.9% after consumer price index inflation data read softer than expected for August, opening the door for more rate cuts by the Bank of Korea.

Singapore’s Straits Times index rose 0.4%, while Australian shares retreated on weak data. 

Chinese stocks retreat from recent peaks after underwhelming PMIs 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.9% and 0.8%, respectively. Both indexes traded below multi-year highs hit last week, and also appeared to be due for some consolidation after a stellar performance through August. 

Hong Kong’s Hang Seng index fell 0.7%. 

Weak purchasing managers index readings for August, released over the past two days, dampened optimism towards Chinese markets, keeping them rangebound since Monday. 

Government PMI data showed a bigger-than-expected decline in manufacturing activity, while private PMI data showed the manufacturing sector unexpectedly grew in August, albeit at a sluggish pace. 

The readings highlighted some falling off in Chinese business activity as support from Beijing ran dry, which could in turn herald more weakness in the world’s second-largest economy. But sustained economic weakness is expected to attract even more stimulus measures from Beijing. 

Hong Kong and Chinese chipmaking stocks were the worst performers on Tuesday, as they faced some profit-taking after bets on more Chinese self reliance for artificial intelligence boosted the sector in August. 

AI chipmaker Cambricon Technologies Corp Ltd (SS:688256) clocked wild swings on Tuesday, while Hong Kong-listed Semiconductor Manufacturing International Corp (HK:0981) and Hua Hong Semiconductor Ltd (HK:1347) slid nearly 6% apiece. 

Australia stocks fall as markets brace for muted GDP 

Australia’s ASX 200 fell 0.3% on Tuesday, weighed by softer-than-expected net exports contribution data for the second quarter.

The data showed Australia’s key commodity exports contributed far less to Q2 gross domestic product than expected. The GDP data will be released on Wednesday, and could now come in softer than expected. Market consensus is for a 0.5% quarter-on-quarter increase. 

Still, Australia logged a smaller-than-expected current account deficit in the second quarter. 

India stocks remain pressured by US tariffs 

India’s Nifty 50 index opened 0.2% higher on Tuesday, but was nursing steep losses since late-August as Trump’s 50% trade tariffs against the country took effect.

While some of these losses were offset by strong economic data from India, sentiment towards local markets remained largely negative. The rupee steadied after hitting a record low against the dollar on Monday. 

Trump on Monday claimed that India had offered to lower all tariffs on U.S. goods to zero, even as Prime Minister Narendra Modi was seen meeting Chinese and Russian leaders last week, somewhat defying pressure from Washington.

Trade talks between Washington and New Delhi were seen largely falling through as Trump’s tariffs took effect last week. The tariffs are aimed at curbing India’s purchases of Russian oil, with U.S. officials claiming that New Delhi had funded Russia’s war with Ukraine. 

But India has so far largely rejected calls to curb Russian oil imports, given that the country is heavily dependent on foreign oil.