Asian markets opened on a cautious note this morning, with investors reacting to weak US economic data and renewed tariff threats from Washington that clouded the outlook for global trade and growth.
The Nikkei 225 in Tokyo posted modest gains of 0.4 per cent, supported by local corporate earnings and a softer yen. In contrast, Hong Kong’s Hang Seng Index slipped 0.1 per cent amid continued pressure on Chinese tech stocks, while the Shanghai Composite edged up 0.3 per cent. India’s Sensex opened flat as investors awaited a key interest rate decision from the Reserve Bank of India (RBI) later today.
US data triggers global caution
Asian sentiment tracked declines on Wall Street overnight, where major indices lost ground following signs of weakening in the US services sector. The S&P 500 fell 0.5 per cent, the Nasdaq slid 0.7 per cent, and the Dow Jones dipped 0.1 per cent. The data has raised concerns about the possibility of a slowdown in US economic momentum, despite expectations of a Federal Reserve rate cut in September.
Investors in Asia are increasingly wary of stagflation risks—where slowing growth coincides with persistent inflation. This has weighed on cyclical stocks, particularly in export-driven economies.
Tariff threats revive trade anxiety
Further unsettling markets were comments from former US President Donald Trump, who reiterated plans to impose sweeping new tariffs if elected in November. His proposal includes levies on semiconductors, pharmaceuticals, and goods from India, fuelling fears of a broader escalation in trade tensions.
Asian exporters are especially vulnerable to protectionist policies, and the prospect of renewed trade barriers is prompting investors to reassess risk across the region. Analysts warn that prolonged uncertainty could dampen investment flows and suppress earnings across several key sectors.
India eyes central bank direction
In Mumbai, the Sensex remained little changed in early trading, reflecting investor caution ahead of the RBI’s interest rate announcement. Most economists expect the central bank to keep the benchmark rate steady at 5.50 per cent, citing persistent inflation and external volatility.
Domestic markets are looking for signals on the RBI’s policy direction, especially any dovish commentary that might support growth amid global headwinds. The Nifty and Sensex closed down 0.30 and 0.38 per cent respectively on Monday, underscoring the cautious mood.
Australia leads gains with local tailwinds
Australia’s ASX 200 bucked the regional trend, rising nearly 0.8 per cent and hitting a new record high in early trade. Gains were led by strong performances in the resources and financial sectors, supported by expectations that the Reserve Bank of Australia may continue its dovish stance in the coming months.
The local rally highlights Australia’s relative insulation from current global market anxieties, at least in the near term, and underscores the importance of domestic factors in driving performance.
Outlook remains data-driven
Market direction in the coming days is likely to hinge on fresh US economic data, further signals from the Fed, and any updates to global trade policy. Asian investors are expected to remain selective, favouring defensive sectors and currencies seen as safe havens.
While regional indices remain broadly resilient, the return of trade friction and macroeconomic uncertainty is likely to keep volatility elevated in the short term.
REFH – Newshub, 6 August 2025
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