Market Overview

Investors locked in gains on July 1 as South Korea’s KOSPI fell 1.7%, the steepest decline among Asian markets, even though the index had surged nearly 65% over the three months to June. The broader MSCI Asia ex‑Japan Index rose about 21% in the same period.

Regional Equity Moves

Japan’s Nikkei 225 advanced 0.6% while the TOPIX was little changed, and the Shanghai Composite gained 0.9% with the CSI 300 up 0.3%. Hong Kong’s market remained closed for a public holiday. Indonesia’s Jakarta Stock Exchange Composite rose more than 1% after inflation data showed a June rate of 3.2%.

Manufacturing Activity

Strong factory data underpinned the gains in China and Japan. In China, official manufacturing activity stayed in expansion territory in June, and a private RatingDog survey indicated continued expansion, albeit with a slight easing. Japan’s final au Jibun Bank manufacturing PMI edged down but remained firmly in expansion and above May’s level; the Bank of Japan’s Tankan survey reported improved sentiment among large manufacturers in Q2. Thailand’s manufacturing PMI rose to 53.6, Malaysia’s improved to 50.7, the Philippines edged up, while Indonesia’s PMI stayed in contraction.

Trade and External Sector

South Korea’s June export value jumped 70.9% year‑on‑year, imports rose 30.1% year‑on‑year, and the trade surplus widened to $36.15 billion, highlighting the resilience of the export sector.

Other Regional Data

Australia’s building approvals unexpectedly fell 1.1% in May, pulling the S&P/ASX 200 down 0.6%.

U.S. Market Signals

U.S. S&P 500 futures and Nasdaq 100 futures each slipped 0.3% as investors awaited the Federal Reserve’s guidance, Thursday’s payroll report, the start of the U.S. earnings season, and further developments in the Middle East.

Analyst Commentary

Bank of America raised its year‑end targets for the Nikkei 225 and TOPIX, citing stronger‑than‑expected AI demand and a higher probability that the key oil‑shipping route through the Strait of Hormuz remains open.

Geopolitical Note

U.S. officials indicated that talks with Iran continued to make progress following positive discussions with Qatari leaders, although recent clashes around the Strait of Hormuz briefly disrupted the 60‑day negotiating process.