Market Overview

Asian equity markets closed Tuesday on a broadly positive note, with most regional bourses posting gains that set the stage for one of the strongest second‑quarter performances in recent years. China’s Shanghai‑Shenzhen CSI 300 index rose more than 1.1% and the Shanghai Composite advanced 0.5% after the country’s official manufacturing PMI unexpectedly returned to expansion territory in June, registering 50.3. The non‑manufacturing PMI climbed to 50.2 and the composite gauge reached 50.6, signalling that high‑tech exports continued to underpin growth despite persistent weakness in domestic demand.

Technology‑Driven Rally

The quarter’s rally was powered by artificial‑intelligence‑related semiconductor stocks. Japan’s Nikkei 225 gained over 1% on the day and is on track for a quarterly increase exceeding 36%, while South Korea’s KOSPI rose 1% and is poised for an almost 65% jump for the quarter after a series of record highs. The MSCI Asia ex‑Japan Net USD index has appreciated roughly 21% over the past three months, led by South Korea, which now ranks as the world’s best‑performing major equity market for the year.

Divergent Performances

Not all markets shared the upside. Hong Kong’s Hang Seng index fell more than 1% and is projected to end the quarter down about 7.5%. Indonesia’s Jakarta Stock Exchange Composite Index declined roughly 1.9%, extending its underperformance as foreign investors continue to withdraw amid concerns over policy credibility, market transparency, and a potential MSCI downgrade, leaving it the world’s worst‑performing major equity index this year.

Regional Data Highlights

In Australia, the ASX 200 rose 0.5% following minutes from the Reserve Bank of Australia’s June meeting, which reaffirmed a cautious stance on inflation and signalled readiness to hike rates further after an aggressive tightening cycle earlier in the year. Japan’s TOPIX index edged up 0.3% after data showed industrial production in May rose less than expected while unemployment remained steady. Indonesia’s foreign outflows were highlighted as a key factor behind its market weakness.

Investors also processed Philippine trade and inflation figures, noting that oil‑price volatility remains a critical consideration for the import‑dependent economy. Thailand’s industrial production data pointed to continued softness in manufacturing activity, with the SET Index up 0.3% and the Philippines’ PSEi Composite down 1.6%.

Outlook and Upcoming Catalysts

Later in the day, market participants will watch European inflation releases, U.S. consumer confidence and JOLTS job‑opening data, and on Thursday, the U.S. non‑farm payrolls report. Attention will also turn to remarks from Federal Reserve Chair Kevin Warsh on Wednesday, developments in U.S.–Iran talks, and India’s trade‑balance and RBI credit‑review data for fresh cues heading into the third quarter.

Analyst Commentary

ING analysts noted that while the June PMI data showed some strength, it also hinted at a potential slowdown in second‑quarter economic growth, suggesting that Beijing may consider additional stimulus measures in the coming months.

Reporting by Roushni Nair