Stocks in major Asia-Pacific markets plummeted on July 25 over renewed concerns about trade tensions, Asian central bank policies, and earnings volatility. This panic led to a widespread surge in profit-taking.
The benchmark stock markets in Japan, China, and India saw declines ranging from 0.5% to 0.9%, bringing their recent winning streak to an end, according to reports from Bloomberg and Reuters.
The stock price of Nikkei 225 decreased 0.9% to 41,456.23, while Topix declined 0.86%, its largest drop in more than a week. The decline followed increases earlier in the month after the US–Japan trade deal capped tariffs at 15%, according to Reuters.
Analysts at Nomura Securities noted that the Japan stock market trade optimism had buoyed. Investors seem to be focusing on the Bank of Japan’s upcoming monetary policy decisions. “The optimism from the trade deal has already been priced in. Now, the uncertainty around policy tightening and domestic fiscal plans is weighing,” strategist Hiroshi Tanaka told Bloomberg.
China’s CSI 300 fell 0.53%, while the Shanghai Composite fell 0.3%, as per numbers quoted by the South China Morning Post. This followed investor sentiment weakening around recent hints from the Chinese Politburo about overcapacity reform in dominant sectors like solar, EVs, and real estate.
“Markets need honest execution, not more promises,” Xiamen University Professor Lin Boqiang told Caixin.
Tech and real estate shares led the losses following mixed earnings and downbeat consumer confidence data, according to AP News.
In India, the Sensex today dropped 721 points to end at 66,488, with the Nifty 50 shedding 0.9%, led by vulnerability in financial, IT, and auto stocks. Shares of Bajaj Finance plunged by more than 6% after the company reported dismal Q1 results, according to The Economic Times.
Rupee fell to a one-month low of Rs. 86.58 against the dollar, with rising US Treasury yields and ongoing foreign institutional investor (FII) outflows, as per Reuters. Fears regarding India’s current trade negotiations with the US and UK are also dampening sentiment, as shared by analysts at SBI Capital in a Mint report.
Market strategists are convinced that the recent rally has entered overbought territory, and Thursday’s pullback indicates caution ahead of global monetary policy indicators.
Although Japan, Indonesia, and the Philippines have secured partial tariff relief, others, such as India, South Korea, and Thailand, are still awaiting it. The US is expected to finalize tariff decisions by August 1.
Meanwhile, central bank meetings in the US, Japan, and India next week could set the tone for markets going forward.
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Asia-Pacific equities corrected modestly on Thursday, bogged down by a mix of profit-taking, trade policy tension, and macroeconomic crosswinds. Unless there is greater clarity on trade agreements and central bank attitudes, regional markets are likely to stay range-bound, according to analysts.