Source: Sharecast
According to the National Bureau of Statistics, industrial profits in the world’s second-largest economy fell over the first five months of the year, marking the sharpest monthly decline since October 2023.
The figures raised concerns over the financial health of China’s manufacturing and industrial sectors.
“US stock futures showed a slight increase on Friday, while Japanese stocks saw gains, and South Korean stocks declined,” said TickMill market strategy partner Patrick Munnelly.
“US commerce secretary Howard Lutnick announced late Thursday that an agreement on trade had been reached between the US and China following discussions from the previous month.
“Additionally, the Treasury Department revealed a deal with G7 allies that allows some US companies to be exempt from certain taxes imposed by other countries in exchange for withdrawing the ‘revenge tax’ proposed in president Donald Trump’s tax legislation.”
Munnelly noted that Treasuries eased after rallying on Thursday, due to heightened expectations for Federal Reserve rate cuts.
“The swaps market has fully accounted for two additional rate reductions this year, with increased speculation of a third cut.
“The dollar index remained mostly stable after experiencing four consecutive days of decline.”
Markets mixed as investors digest regional data
Japan’s markets outperformed, with the Nikkei 225 rising 1.43% to close at 40,150.79 and the Topix gaining 1.28% to 2,840.54.
Gains were led by Sumitomo Metal Mining, which surged 6.87%, alongside Sumitomo Dainippon Pharma, up 6.62%, and Yokohama Rubber, which climbed 6.42%.
In mainland China, the Shanghai Composite fell 0.7% to 3,424.23, weighed down by sharp losses in industrial and chemical stocks.
Shanghai Xintonglian Packaging plunged 10.03%, while Zhejiang Jianye Chemical and Zhejiang China Commodities City Group both dropped nearly 10%.
The Shenzhen Component edged higher by 0.34% to 10,378.55.
Hong Kong’s Hang Seng Index slipped 0.17% to 24,284.15, with notable declines in China Life Insurance, down 2.97%, China Resources Land, down 2.55%, and Budweiser Brewing Company, which lost 2.49%.
South Korea’s Kospi 100 fell 0.71% to 3,084.35.
KakaoPay tumbled 10.23%, Lotte Chemical declined 6.39%, and EcoPro Materials shed 6.33%, contributing to the index’s weakness.
Australia’s S&P/ASX 200 closed 0.43% lower at 8,514.20, dragged by a steep 18.66% plunge in plumbing supplier Reece.
APA Group fell 4.01%, and travel agency Flight Centre lost 4%.
New Zealand’s S&P/NZX 50 bucked the regional trend, gaining 0.83% to finish at 12,583.59.
Infratil rose 2.88%, Summerset Group added 2.74%, and Spark New Zealand climbed 2.54%.
In currency markets, the dollar was little changed against the yen at JPY 144.43, down 0.09% against the Aussie at AUD 1.5262, and 0.25% lower on the Kiwi, changing hands at NZD 1.6469.
Oil prices advanced, with Brent crude futures last up 0.75% on ICE at $68.24 per barrel, and the NYMEX quote for West Texas Intermediate gaining 0.78% to $65.75.
Industrial profits fall sharply in China, Tokyo inflation eases
In economic news, China’s industrial profits fell sharply in May, underscoring the challenges facing Beijing’s efforts to revive corporate earnings.
Profits at major industrial firms dropped 9.1% year-on-year, the steepest decline since October, when profits fell 10%.
Cumulative profits for the first five months of 2025 were down 1.1% from a year earlier.
The National Bureau of Statistics attributed the decline to weak domestic demand and falling industrial prices.
The data highlighted continued pressure on the manufacturing, mining, and utilities sectors, despite a series of government stimulus measures launched after a record 27.1% slump in profits last September.
In Japan, inflation in Tokyo eased in June, offering some relief to consumers.
The capital’s core consumer price index, which excludes fresh food and fuel, rose 3.1% from a year earlier, down from 3.6% in May and below the 3.3% forecast in a Reuters poll.
Headline inflation also slowed to 3.1% from 3.4%.
Tokyo’s inflation figures are widely seen as an early indicator of national price trends and are closely monitored by the Bank of Japan.
Japan’s unemployment rate meanwhile held steady at 2.5% in May, matching economists’ expectations.
However, the ratio of job openings to applicants slipped to 1.24 from 1.26 in April, signaling a slight softening in the labor market.
Retail sales in Japan grew 2.2% year-on-year in May, slowing from April’s 3.3% increase and falling short of the 2.7% rise expected by economists.
It marked the weakest growth in three months, suggesting some moderation in consumer spending momentum.
Reporting by Josh White for Sharecast.com.
