On Monday, Asian markets faced a mixed trading session characterized by varied performances across major indices, driven largely by economic data from China and broader regional factors.
In Tokyo, the Nikkei 225 index dropped sharply by 1.9% to close at 38,070.40. The decline reflected investor concerns over the economic outlook, exacerbated by weaker-than-expected data from China. Similarly, South Korea’s Kospi index retreated by 0.5% to 2,744.63, while Australia’s S&P/ASX 200 edged down 0.2% to 7,712.90. The negative sentiment in these markets was influenced by lingering uncertainties surrounding global economic recovery and geopolitical tensions.
Conversely, Hong Kong’s Hang Seng index managed to eke out a modest gain of 0.1%, closing at 17,960.09, signaling a more cautious optimism amidst the broader market downturns. Meanwhile, the Shanghai Composite index in mainland China declined by 0.6% to 3,015.95, reflecting concerns over economic indicators released earlier in the day.
The key economic data from China painted a sobering picture for investors. Factory output in China fell by 5.6% in May compared to the previous year, a significant slowdown from the 6.7% growth recorded in April and well below analysts’ expectations. This downturn underscored ongoing challenges in China’s industrial sector, which plays a crucial role in driving economic growth. Additionally, retail sales for the first five months of the year only managed a modest 4.1% increase, reflecting subdued consumer spending amid economic uncertainties and government policies aimed at rebalancing the economy.
Of particular concern was the performance of China’s property market, a key pillar of its economy. Property investments in May declined by 10% year-on-year, while home prices in major cities dropped by 3.2%. This marked a continuation of the downturn seen in recent months, despite various measures implemented by authorities to stimulate the sector. Property sales plummeted by a staggering 30.5% year-on-year, highlighting deep-seated challenges and subdued market sentiment.
Elsewhere in Asia, trading volumes were lighter as several markets in Southeast Asia remained closed for holidays. Thailand’s SET index, however, recorded a notable decline of 1.2%, reflecting broader regional concerns and investor caution.
In contrast to the mixed performance in Asian markets, U.S. stocks showed resilience last week, with major indices hovering near record levels. The S&P 500 index closed the week nearly flat at 5,431.60, marking the first week without setting a new all-time high in recent weeks. The Dow Jones Industrial Average edged slightly lower by 0.1% to 38,589.16, while the tech-heavy Nasdaq composite managed to post a modest gain of 0.1%, setting a new record close at 17,688.88, driven by continued strength in technology stocks.
In Europe, however, markets faced significant sell-offs following recent elections that injected fresh uncertainties. Victories by far-right parties in countries like France raised concerns about political stability within the European Union and its impact on fiscal policies and economic growth. This led to sharp declines in key indices, with France’s CAC 40 index plummeting by 2.7%, marking its worst weekly performance in over two years. Germany’s DAX index also saw a notable decline of 1.4%, reflecting broader market jitters and risk aversion among investors.
Commodity markets showed a muted response, with U.S. benchmark crude oil prices experiencing slight declines. West Texas Intermediate (WTI) crude oil fell by 30 cents to settle at $77.75 per barrel on the New York Mercantile Exchange, while Brent crude, the international benchmark, also dipped by 30 cents to $82.32 per barrel.
In currency markets, the U.S. dollar strengthened marginally against the Japanese yen, reaching 157.52 yen, while the euro weakened slightly against the dollar to $1.0704, reflecting cautious trading amid global economic uncertainties.
Overall, the mixed performance across global markets underscored ongoing challenges and uncertainties surrounding economic recovery, inflation trends, and geopolitical developments. Investor sentiment remains cautious, with market dynamics heavily influenced by evolving economic data and policy decisions from major central banks, particularly the Federal Reserve in the United States.