Asia report: Markets waver on mixed China manufacturing data
By Josh White
Date: Monday 01 Sep 2025
(Sharecast News) - Asia-Pacific markets ended mixed on Monday as investors weighed fresh Chinese manufacturing data and regional political developments.
China's private RatingDog manufacturing PMI rose in August, signalling modest expansion after July's contraction.
The country's official PMI, released Sunday, edged up but still remained in contraction territory.
The data, alongside remarks from Chinese President Xi Jinping at the Shanghai Cooperation Organization summit urging cooperation in artificial intelligence while rejecting a "Cold War mentality," set the tone for trading.
Stephen Innes at SPI Asset Management noted that "the tape closed August with a reminder that gravity still works, even on the high-flyers," as investors reassessed technology valuations after a summer rally.
"Tech, the same engine that powered April's comeback caravan, ran into month-end rebalancing like a convoy hitting a ditch.
"The Nasdaq gave back 1.2%, the S&P slipped from record highs, and traders found themselves bracing for September - Wall Street's statistical bogey month - when institutional rebalancing, softer retail flows, and seasonal volatility often collide."
Markets mixed as investors digest China data
In Japan, the Nikkei 225 fell 1.22% to 42,197.00, with losses led by Advantest, down 7.92%, Furukawa Electric off 5.46%, and SoftBank Group declining 4.81%.
The broader Topix index slipped 0.39% to 3,063.19.
South Korea's Kospi 100 dropped 1.61% to 3,168.90, dragged lower by Hanmi Semiconductor, SK Hynix, and NCsoft, each down more than 4%.
Australia's S&P/ASX 200 eased 0.51% to 8,927.70 as Generation Development Group slid 8.7%, Mesoblast fell 7.34%, and Perpetual lost 6.4%.
In contrast, Chinese equities advanced, with the Shanghai Composite up 0.46% at 3,875.53 and the Shenzhen Component rising 1.05% to 12,828.95.
Zhejiang HangKe Technology surged 16.71%, while Cultural Investment Holdings and JiShi Media each gained more than 10%.
Hong Kong's Hang Seng Index jumped 2.15% to 25,617.42, driven by Alibaba's 18.5% rally and strong gains in CSPC Pharmaceutical Group and WuXi Biologic.
"China's market engine, on the other hand, is roaring again, but the smell of fumes is impossible to ignore," Innes said.
"Liquidity has been pumped into the system with a firehose, and stocks have surged ahead of their Western peers.
"Yet the true accelerant isn't growth fundamentals, it's leverage - margin debt sloshing in the tank like gasoline.
"The rally feels less like a finely tuned machine and more like a drag racer revving at the line: fast, flashy, and thrilling, but one wrong gear shift and the whole thing risks spinning out."
New Zealand's S&P/NZX 50 added 1.08% to 13,070.45, boosted by NZX, Mainfreight, and Tourism Holdings, which climbed 5.04%, 4.21%, and 3.98%, respectively.
In currencies, the dollar was last down 0.07% on the yen to trade at JPY 146.95, as it fell 0.27% against the Aussie to AUD 1.5249, and lost 0.35% on the Kiwi to change hands at NZD 1.6910.
"It shouldn't surprise anyone that the dollar's path of travel is lower," Innes said, highlighting shifting expectations for US monetary policy.
"The real game isn't if it weakens, but when you size the trade - especially with the drag of negative carry always gnawing at the position ... the next payrolls release is more tripwire than data point.
Oil prices strengthened, with Brent crude futures last up 0.64% on ICE at $67.91 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.72% to $64.47.
China manufacturing showing signs of improvement
In economic news, China's manufacturing sector showed signs of improvement in August, with the private RatingDog (previously Caixin) PMI rising to a five-month high of 50.5 from 49.5 in July, moving back into expansionary territory and exceeding expectations of 49.7.
The survey, compiled by S&P Global, reported that production returned to growth as new orders increased and the contraction in export demand eased.
Purchasing activity and inventories expanded, while unfinished work also increased.
However, RatingDog founder Yao Yu cautioned that the rebound was modest, describing it as "a breath of relief rather than a sustained rally," noting that domestic demand remained weak, profit margins were under pressure, and rising input costs were starting to feed into output prices.
The official manufacturing PMI, released separately on Sunday, remained in contraction at 49.4 for August, compared with 49.3 in July, underscoring continued softness in parts of the sector.
In Australia, total dwelling construction approvals fell sharply by 8.2% month-on-month in July to 15,769 units, far exceeding expectations of a 4.8% drop and reversing a 12.2% surge in June.
The fall was driven by a 22.3% plunge in approvals for private sector dwellings excluding houses, while approvals for private houses edged up 1.1%.
By state, declines were led by New South Wales, down 24.6%, while Tasmania, Western Australia, Queensland, and Victoria recorded gains.
Separately, Australian corporate profits fell 2.4% quarter-on-quarter in the second quarter, missing forecasts for a 1.2% rise and marking a second straight quarterly decline.
Profits were down 3.3% on an annual basis, although this was the smallest yearly fall in a year.
Investors were also weighing a US federal appeals court ruling on Friday that most of president Donald Trump's "reciprocal tariffs" were illegal.
"Tariffs are not yesterday's story - they're today's price action and tomorrow's headline risk," Innes said.
"A liberal appeals court in Washington may have ruled Trump's tariffs illegal, but nobody on the Street believes that's the end of it.
"This case is headed for the Supreme Court, where a Republican majority makes it more likely the gavel falls in favor of keeping tariffs alive.
"The path of least resistance isn't lower tariffs, it's higher - and markets that treat protectionism as noise will find it's a signal with teeth."
Reporting by Josh White for Sharecast.com.
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