Market Update
Tokyo Indexes Extend 2-Day Losses After Trade Talks with the U.S. Stall
Akira Ito
02 Jul, 2025
Tokyo
Stock market indexes declined for the second consecutive day after trade tensions with the U.S. reignited.
After more than two months of fruitless talks, Japan's trade negotiations with the U.S. appear to go nowhere, as the two sides remain far apart on additional duties of 25% on Japanese cars and automobile parts.
In addition, Japanese negotiators are not ready to relax restrictions on rice and vehicle imports from the U.S.
The Nikkei 225 Stock Average decreased as much as 1%, the broader Topix dropped 0.3%, and the yen strengthened to 143.86.
The Trump administration launched a global tariff war in early April, hoping that key trading partners will yield to the U.S. demand of additional import duties and ease persistent trade deficits.
The U.S. trade deficit in 2025 is likely to cross one trillion dollars, driven by the surge in imports of vehicles, food products, consumer products, engineered goods, and intermediate parts.
For 2024, the goods and services deficit rose 17% to $918.4 billion, driven by a 14% rise in the goods deficit to $1.2 trillion, offset by a 5.4% increase in the services surplus to $293.3 billion.
Japan Indexes and Stocks
The Nikkei 225 Stock Average declined 0.3% to 39,854.23, and the broader Topix edged down 0.01% to 2,831.73.
Toyota Motor increased 0.8% to ¥2,471.50, Honda Motor added 1.6% to ¥1,419.0, and Nissan Motor Co. Ltd. edged up 0.1% to ¥342.10.
Sony Group Corp. increased 0.3% to ¥3,670.0, Daikin Industries added 3.4% to ¥17,475.0, Shimano Inc. added 1.2% to ¥20,605.0, and Murata Manufacturing decreased 0.7% to ¥2,102.0.
HKMA Intervened Second Time to Defend HK Dollar Peg, Mainland Investment In Hong Kong Stocks Jumped to New High
Li Chen
02 Jul, 2025
Hong Kong
Chinese stocks lacked direction on Wednesday, and investors stayed on the sidelines amid uncertainties linked to the international trade growth outlook.
The Hang Seng index edged up 0.7%, and the CSI 300 index wavered around the flatline.
China stocks have rebounded over the last eight weeks and recovered from sharp losses in April, as the worries of sky-high U.S. trade tariffs eased.
Despite the easing of tensions, the U.S. tariffs are expected to remain near 10%, and Chinese companies are likely to face additional restrictions on importing advanced chips.
Moreover, Chinese companies are accelerating the expansion of their operations in Vietnam, Thailand, Malaysia, Mexico, and Hungary.
The Hong Kong dollar faced selling pressure for the second week in a row, forcing the Hong Kong Monetary Authority to intervene for the second time.
The rate differential of as much as 300 basis points is driving the carry trade, where investors borrow in the Hong Kong dollar and reinvest the proceeds in the U.S. dollar.
The HKMA sold US $2.55 billion and purchased the equivalent of HK $20.02 billion at an average price of HK $7.85.
On Jun 26, the monetary authority sold US $1.2 billion to buy HK $9.42 billion to defend the currency peg, set in a narrow band between HK $7.75 and HK $7.85.
Mainland investors continue to pour funds into the Hong Kong-listed stocks in the first half of 2025.
The southbound fund flows on the decade-old Stock Connect link soared 90% from a year ago to HK $731.2 billion, or US $93 billion, and are approaching the record HK $808 billion of investment flows in 2024.
The steady flow of funds is driven by the increase in liquidity on the mainland and investors chasing Internet-driven stocks listed on the Hong Kong Stock Exchange.
China Indexes and Stocks
The Hang Seng index edged higher 0.7% to 24,237.69, and the mainland-focused CSI 300 index edged up 0.03% to 3,945.64.
The Hong Kong-based property stocks traded sideways amid worries of a liquidity crunch and a slight increase in mortgage rates after the HKMA's currency intervention.
Sun Hung Kai Properties Ltd. edged up 2.6% to HK $92.40, Henderson Land Development jumped 5.2% to HK $28.90, and Longfor Group Holdings gained 3.5% to HK $9.59.
China Construction Bank added 2.9% to HK $8.15, Bank of China increased 1.9% to HK $4.64, and HSBC Holdings plc decreased 0.4% to HK $94.60.
HKMA Intervened Second Time to Defend HK Dollar Peg, Mainland Investment In Hong Kong Stocks Jumped to New High
Li Chen
02 Jul, 2025
Hong Kong
Chinese stocks lacked direction on Wednesday, and investors stayed on the sidelines amid uncertainties linked to the international trade growth outlook.
The Hang Seng index edged up 0.7%, and the CSI 300 index wavered around the flatline.
China stocks have rebounded over the last eight weeks and recovered from sharp losses in April, as the worries of sky-high U.S. trade tariffs eased.
Despite the easing of tensions, the U.S. tariffs are expected to remain near 10%, and Chinese companies are likely to face additional restrictions on importing advanced chips.
Moreover, Chinese companies are accelerating the expansion of their operations in Vietnam, Thailand, Malaysia, Mexico, and Hungary.
The Hong Kong dollar faced selling pressure for the second week in a row, forcing the Hong Kong Monetary Authority to intervene for the second time.
The rate differential of as much as 300 basis points is driving the carry trade, where investors borrow in the Hong Kong dollar and reinvest the proceeds in the U.S. dollar.
The HKMA sold US $2.55 billion and purchased the equivalent of HK $20.02 billion at an average price of HK $7.85.
On Jun 26, the monetary authority sold US $1.2 billion to buy HK $9.42 billion to defend the currency peg, set in a narrow band between HK $7.75 and HK $7.85.
Mainland investors continue to pour funds into the Hong Kong-listed stocks in the first half of 2025.
The southbound fund flows on the decade-old Stock Connect link soared 90% from a year ago to HK $731.2 billion, or US $93 billion, and are approaching the record HK $808 billion of investment flows in 2024.
The steady flow of funds is driven by the increase in liquidity on the mainland and investors chasing Internet-driven stocks listed on the Hong Kong Stock Exchange.
China Indexes and Stocks
The Hang Seng index edged higher 0.7% to 24,237.69, and the mainland-focused CSI 300 index edged up 0.03% to 3,945.64.
The Hong Kong-based property stocks traded sideways amid worries of a liquidity crunch and a slight increase in mortgage rates after the HKMA's currency intervention.
Sun Hung Kai Properties Ltd. edged up 2.6% to HK $92.40, Henderson Land Development jumped 5.2% to HK $28.90, and Longfor Group Holdings gained 3.5% to HK $9.59.
China Construction Bank added 2.9% to HK $8.15, Bank of China increased 1.9% to HK $4.64, and HSBC Holdings plc decreased 0.4% to HK $94.60.
Eurozone Inflation Edged Up to 2%, Germany's Jobless Count Held at Decade High
Bridgette Randall
01 Jul, 2025
London
European markets edged down on the first day of the second half, and investors remained focused on the ongoing trade negotiations with the U.S.
The European Union's negotiators are looking to avert tariffs on pharmaceuticals and commercial aircrafts ahead of the U.S. deadline of July 9.
Moreover, EU negotiators are likely to uphold tough standards on U.S. food products amid worries of higher level of food chemicals and genetically modified varieties.
EU Consumer Price Inflation Edged Higher to 2%
On the economic front, consumer price inflation in the eurozone edged higher to 2% from an eight-month low of 1.9% in May, according to the latest data released by the Eurostat.
The slowdown in energy price inflation to 2.7% from 3.3% was overwhelmed by the slight acceleration in service inflation to 3.3% from 3.2% in May, respectively.
Core inflation, which excludes food and energy prices, was unchanged at 2.3%.
Germany's Job Seekers Approach Decade-High 3 Million
Germany's seasonally adjusted jobless rate held at 6.3% in June, according to the Federal Statistical Office or Destatis.
The jobless rate held for the fourth month in a row, and remained highest since September 2020.
The number of jobseekers increased by 11,000 to 2.97 million, the highest in a decade.
"The labour market continues to show signs of economic weakness. Unemployment continues to develop unfavorably.
And companies remain reluctant to hire," said labor office head Andrea Nahles.
Europe Indexes and Yields
The DAX index decreased by 0.6% to 23,762.53, the CAC-40 index edged lower 0.4% to 7,631.11, and the FTSE 100 index declined 0.3% to 8,738.06.
The yield on 10-year German bonds inched lower to 2.55%, French bonds decreased to 3.24%, the UK gilts moved down to 4.43%, and Italian bonds edged lower to 3.46%.
The euro increased to $1.18; the British pound was higher at $1.37; and the U.S. dollar was lower and traded at 79.00 Swiss cents.
Brent crude increased $0.49 to $67.23 a barrel, and the Dutch TTF natural gas was higher by €0.57 to €33.63 per MWh.
Europe Movers
Defense stocks declined following a surge in June.
Safran SA decreased 2.4% to €269.20, Airbus SE dropped 2.4% to €173.04, Dassault Aviation SA fell 2.2% €293.40, BAE Systems edged up 0.1% to 1,888.76, Rolls-Royce PLC fell 0.8% to 959.80 pence.
Luxury and fashion stocks traded higher amid optimism about the possible trade deal with the U.S.
LVMH added 3.4% to €459.70, Kering SA gained 4.2% to €192.44, Hermes International SCA edged up 0.2% to €2,303.0, Moncler SpA advanced 1.5% to €49.18.
Eurozone Inflation Edged Up to 2%, Germany's Jobless Count Held at Decade High
Bridgette Randall
01 Jul, 2025
London
European markets edged down on the first day of the second half, and investors remained focused on the ongoing trade negotiations with the U.S.
The European Union's negotiators are looking to avert tariffs on pharmaceuticals and commercial aircrafts ahead of the U.S. deadline of July 9.
Moreover, EU negotiators are likely to uphold tough standards on U.S. food products amid worries of higher level of food chemicals and genetically modified varieties.
EU Consumer Price Inflation Edged Higher to 2%
On the economic front, consumer price inflation in the eurozone edged higher to 2% from an eight-month low of 1.9% in May, according to the latest data released by the Eurostat.
The slowdown in energy price inflation to 2.7% from 3.3% was overwhelmed by the slight acceleration in service inflation to 3.3% from 3.2% in May, respectively.
Core inflation, which excludes food and energy prices, was unchanged at 2.3%.
Germany's Job Seekers Approach Decade-High 3 Million
Germany's seasonally adjusted jobless rate held at 6.3% in June, according to the Federal Statistical Office or Destatis.
The jobless rate held for the fourth month in a row, and remained highest since September 2020.
The number of jobseekers increased by 11,000 to 2.97 million, the highest in a decade.
"The labour market continues to show signs of economic weakness. Unemployment continues to develop unfavorably.
And companies remain reluctant to hire," said labor office head Andrea Nahles.
Europe Indexes and Yields
The DAX index decreased by 0.6% to 23,762.53, the CAC-40 index edged lower 0.4% to 7,631.11, and the FTSE 100 index declined 0.3% to 8,738.06.
The yield on 10-year German bonds inched lower to 2.55%, French bonds decreased to 3.24%, the UK gilts moved down to 4.43%, and Italian bonds edged lower to 3.46%.
The euro increased to $1.18; the British pound was higher at $1.37; and the U.S. dollar was lower and traded at 79.00 Swiss cents.
Brent crude increased $0.49 to $67.23 a barrel, and the Dutch TTF natural gas was higher by €0.57 to €33.63 per MWh.
Europe Movers
Defense stocks declined following a surge in June.
Safran SA decreased 2.4% to €269.20, Airbus SE dropped 2.4% to €173.04, Dassault Aviation SA fell 2.2% €293.40, BAE Systems edged up 0.1% to 1,888.76, Rolls-Royce PLC fell 0.8% to 959.80 pence.
Luxury and fashion stocks traded higher amid optimism about the possible trade deal with the U.S.
LVMH added 3.4% to €459.70, Kering SA gained 4.2% to €192.44, Hermes International SCA edged up 0.2% to €2,303.0, Moncler SpA advanced 1.5% to €49.18.