Asian Equities Slip on Weaker-than-Expected Chinese Activity Data and Copper Price Plunge

The Asian equities market experienced a decline on Thursday, following the release of weaker-than-expected Chinese activity data and a significant plunge in copper prices. This development has left investors weighing the implications of these events on the global economy.

Investors Weigh Trade Deal between South Korea and the U.S.

Meanwhile, the trade deal between South Korea and the United States is being closely monitored by investors, as it may have far-reaching consequences for the global markets. The agreement, which includes a 15% tariff on imports from South Korea and a $350 billion investment in U.S. projects, has sparked hopes of renewed growth in the region.

Dollar Holds Near Two-Month High

The dollar index remained steady at 98.812, close to its two-month high of 99.987, as investors assessed the Federal Reserve's decision to hold interest rates steady for the fifth consecutive meeting. The dollar is set to register a 3.1% gain for the month, marking its first increase in 2025.

Nasdaq Futures Surge on Strong Earnings from Microsoft and Meta Platforms

The Nasdaq futures market experienced a significant surge of 1.2% as both Microsoft and Meta Platforms reported better-than-expected earnings. The companies' financial results highlighted higher revenue from cloud computing and AI-enabled ad targeting, respectively. Market analyst Tony Sycamore noted that these earnings reports have "shot the lights out," indicating a strong performance by these tech giants.

MSCI Index Eases 0.7%

The MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.7%, despite being on track for its fourth consecutive monthly gain in July. Stocks in Hong Kong and China led the declines, with official PMI gauges showing weaker-than-expected economic activity during July.

Markets Await Bank of Japan's Policy Decision

The markets are now awaiting the Bank of Japan's policy decision later in the day, as traders seek any hints that Governor Kazuo Ueda may offer on the likelihood of another rate hike this year. The Federal Reserve's recent decision to hold interest rates steady has left investors wondering about the future direction of monetary policy.

Fed Chair Jerome Powell's Comments Undercut Confidence

Federal Reserve Chairman Jerome Powell's comments after the decision have undercut confidence that borrowing costs will begin to fall in September. Analysts from Citi noted that it will take the next two months of data to convince Fed officials that tariff effects will only lead to modest, one-time price increases and that policy rates should head toward neutral.

U.S. GDP Growth Rebounds

The U.S. gross domestic product growth rebounded more than expected in the second quarter, but the details of the report painted a picture of an economy that was losing steam plagued by uncertainty from Trump's protectionist trade policy. The report highlighted softening economic data and persistent inflation concerns.

Korean Won Appreciates 0.3%

The Korean won appreciated 0.3% after President Trump announced that the U.S. will charge a 15% tariff on imports from South Korea, which will in return invest $350 billion in U.S. projects and purchase $100 billion in U.S. energy products. This development is part of a series of trade policy deals rushed out before an August 1 deadline to avert the imposition of tariffs.

Copper Futures Plunge 19.4%

Copper futures plummeted 19.4% after President Trump announced that the U.S. will impose a 50% tariff on copper pipes and wiring, leaving out copper input materials such as ores, concentrates, and cathodes. This development has left investors worried about supply shortages amid ongoing trade tensions.

Oil Prices Rise Amid Supply Concerns

In commodities, oil prices rose for a fourth straight day, as investors worried about supply shortages amid President Trump's push for a swift resolution to the war in Ukraine and threats of tariffs on countries buying Russian oil. Brent crude futures for September delivery rose 0.33% to $73.48 a barrel, while U.S. West Texas Intermediate crude for September gained 0.21% to $70.15 a barrel.

Conclusion

The Asian equities market experienced a decline on Thursday, following weaker-than-expected Chinese activity data and a significant plunge in copper prices. Investors are weighing the implications of these events on the global economy, as well as the trade deal between South Korea and the United States. The dollar held near its two-month high, while Nasdaq futures surged on strong earnings from Microsoft and Meta Platforms. The markets await the Bank of Japan's policy decision, which may offer clues about the likelihood of another rate hike this year.