The Nikkei 225 index in Japan led Asian stocks higher on July 2, 2023. It rose 1.1% to 31,030.35, reaching its highest level since 1990. Other Asian markets also experienced gains, but China’s gains were more limited. Data revealed that the manufacturing sector in China contracted in June.
The Caixin China Manufacturing Purchasing Managers’ Index (PMI) dropped to 50.2 in June. This is a decrease from the 50.9 recorded in May. A PMI reading below 50 indicates contraction, while above 50 indicates expansion.
The weak PMI data raised concerns about the Chinese economy. China’s economy has been slowing down in recent months.The government has implemented measures to stimulate growth, with limited success so far.
Investors are eagerly awaiting U.S. inflation data to be released on Wednesday. It is expected to show that inflation remained high in June. This could prompt the Federal Reserve to raise interest rates more aggressively. Despite concerns, Asian stocks are still on track for a positive week.
The MSCI Asia Pacific ex-Japan index has risen approximately 1% this week. Other factors affecting Asian markets include the Bank of Japan’s decision to maintain interest rates.
Additionally, Japanese economic data indicates improved business sentiment in Q2. The ongoing war in Ukraine also impacts market sentiment. Overall, Asian markets are expected to remain volatile in the near term. Investors will carefully consider risks and opportunities in different economies.
