APAC Market Wrap - 3 Jul

China: Markets oscillated with a rebound throughout the day, led by the ChiNext Index, with CATL up nearly 5%. Shanghai and Shenzhen exchanges recorded a total turnover of 1.31 trillion yuan, down 67.2 billion from the previous trading day.  At close, the Shanghai Composite rose 0.18%, the Shenzhen Component gained 1.17%, and the ChiNext Index rose 1.9%.  

 

Market sentiment was mixed, with more stocks rising than falling—over 3,200 stocks gained. Sector-wise, PCB, consumer electronics, innovative drugs, and solid-state batteries led gains, while controllable nuclear fusion, marine economy, oil and gas, and gaming sectors saw the largest drops. 

 

Hong Kong: All three major Hang Seng indices declined, with the Hang Seng Index down 0.63%, the Hang Seng Tech Index down 0.67%, and the State-owned Enterprises Index down 0.88%.

 

Sector-wise, tech stocks mostly retreated, while Apple concept stocks strengthened, biotech stocks mostly rose, innovative drug concepts remained strong all day, non-ferrous metal stocks mostly gained, and gold stocks showed mixed performance.  

 

Japan Stock Market:  The Nikkei 225 rose 0.06%, or 23.42 points, to end at 39,785.90. By industry, steel, non-ferrous metals, transport equipment, mining, and chemicals among 20 sectors saw gains. Meanwhile, information communication, warehouse transport, construction, retail, and pharmaceuticals among 13 sectors fell.  

 

South Korea Stock Market: The KOSPI index rose 1.34% to 3,116.27. Sector-wise, steel, consumer electronics, and chemicals saw collective gains, while internet, electrical equipment, and media sectors experienced significant declines.  

 

Singapore Stock Market: The Straits Times Index rose 0.14%, closing at 4,016.19 points. Industrial products, asset management, and building materials led gains, while cyclical retail, pharmaceutical manufacturers, and furniture saw notable drops.  

Key Events  

Japan Senate Election Begins! Inflation Crisis and U.S.-Japan Talks Emerge as Key Issues  

Japan launched a 17-day Senate election campaign on Thursday, with the final voting day set for the 20th of this month. A total of 125 seats are up for grabs, with over 520 candidates expected to compete.  

 

According to comprehensive reports, the primary focus of this election is Japan’s rising cost of living, with candidates from various parties proposing subsidies, lowering or abolishing consumption tax, and curbing rice price hikes to win voter support.  

 

Thai Deputy PM Phumtham Acts as Interim PM  

 

On the afternoon of July 3 local time, the Thai government held a special cabinet meeting at the Government House, announcing that Deputy PM and Interior Minister Phumtham will serve as interim PM while Paetongtarn is suspended from her duties by the Constitutional Court.  

 

Heatwave Strikes! Allianz: One Day of Extreme Heat Equals Half a Day of Strikes  

 

Currently, a heatwave is scorching the Northern Hemisphere in summer, with multiple regions in Europe and Asia confirming the hottest June on record. Forecasts indicate temperatures will continue to rise in many areas over the coming days.  

 

According to a recent report by Allianz Research, a subsidiary of Allianz Group, heatwaves will slow global economic growth by 0.6 percentage points this year.  

 

In Europe, GDP losses range from 0.1 percentage point in Germany to 1.4 percentage points in Spain, where summer temperatures are about 10 degrees higher than in Germany. Italy and Greece may see economic growth slow by about one percentage point due to heatwaves, while France could slow by up to a third of a percentage point.  

 

Overall, heatwaves are expected to reduce European economic growth by 0.5 percentage points in 2025.  

Institutional Views:  

JPMorgan: Nonfarm Data May Reignite U.S. Growth Concerns, Pressure Fed to Cut Rates  

 

The dollar traded steadily as investors held off ahead of the critical U.S. nonfarm employment report. Economists expect a 110,000 job increase for June, down from 139,000 in May, with the unemployment rate projected to rise from 4.2% to 4.3%.

 

JPMorgan’s report suggests this could refocus attention on growth concerns and pressure the Fed to accelerate rate cuts. However, it notes that inflation remains farther from the target, urging caution in rate decisions.  

 

UBS: Trump’s 20% Tariff on Vietnam at Lower End of Expectations  

 

UBS economist William Deng stated in a research note that the U.S.’s 20% tariff on Vietnamese goods is at the lower end of the expected range.

 

Vietnam’s decision to allow duty-free U.S. goods entry was “largely anticipated,” as greater access for American products in tech and energy sectors should benefit Vietnam’s economic growth.  

 

ANZ: ECB May Be Nearing Rate Trough, Expects 25 bps Cut in September  

 

ANZ notes that the European Central Bank (ECB) has cut rates by 200 basis points over the past 12 months, making significant progress in its easing cycle and likely nearing the rate trough.

 

It expects a further 25 basis point cut to 1.75% in September. ECB President Lagarde said monetary policy is in good shape and not on a preset path. ANZ estimates the current neutral range for ECB policy rates at 1.50%-2.50%, with the current 2.0% deposit rate at the midpoint. It predicts weak growth in the eurozone over the next few quarters, maintaining an easing bias.