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Asia Week Ahead: Manufacturing Activity; Policy Rate Decision; and Inflation Prints

For the week ahead in Asia, manufacturing activity will be in focus as S&P Global releases a broad mix of purchasing managers' index reports covering multiple economies.The week opens with a flurry of manufacturing PMI readings for May, followed by inflation data from South Korea and Indonesia on Tuesday.Mid-week, Australia's first-quarter GDP report will take center stage, while markets will also watch a heavy batch of readouts from Vietnam.Thursday will be lighter, led by Australia's April trade report, before Friday brings India's policy rate decision and GDP figures and inflation readouts from multiple regions.Here's what to watch in the week ahead.MONDAY, June 1The week kicked off with a flurry of S&P Global's purchasing managers' index (PMI) reports covering May manufacturing activity across the region.China's manufacturing activity eased after the seasonally adjusted RatingDog China General Manufacturing PMI came in at 51.8, compared with 52.2 in the previous month and the consensus estimate of 51.4 from Investing.com.Data from the National Bureau of Statistic similarly showed factory activity easing, with the official purchasing managers' index falling to a neutral 50 from 50.3 in April.A reading above 50 means growth, while a reading below 50 indicates contraction.Manufacturing activity similarly slowed in Australia as new orders fell sharply for a third consecutive month amid rising costs and ongoing supply-chain disruptions linked to the war in the Middle East.In contrast, Japan's manufacturing production expanded, with the latest S&P Global Japan Manufacturing PMI coming in at 54.5, compared with 55.1 in April, matching the flash data.South Korean manufacturing output also expanded during the month, hitting its highest in five years due to a rise in production and new order volumes, S&P Global said.India, Taiwan and Vietnam were also among the regions that experienced improved output during May.Meanwhile, The Philippines' manufacturing activity returned to growth in May as stronger output and a recovery in new orders offset continued weakness in exports.Moving ahead, the Melbourne Institute said its monthly inflation gauge fell in May after two consecutive monthly increases, driven largely by a decline in transport costs. The monthly cost of living also declined in May, particularly for self-funded retirees.Elsewhere, South Korea recorded a trade surplus of $26.9 billion in May, a new all-time high, and marking the third straight month of more than $20 billion in trade surplus.TUESDAY, June 2Focus shifts Tuesday to inflation data coming in from South Korea.Economists at ING said consumer prices could reach 3% year on year in May, reflecting higher input costs that are likely to be passed on to consumers.Pipeline cost pressures are also likely to reflect in Indonesia's inflation print due Tuesday, with ANZ expecting prices to tick up to 3% from 2.42% in the prior month, the Wall Street Journal reported.Trade figures due in Indonesia the same day could also show moderating exports as the effects of front-loaded demand fade and commodity prices soften, the WSJ said, citing an RHB economist.On the activity front, S&P Global releases its monthly manufacturing PMIs for Indonesia, Malaysia, and Thailand. The Singapore Institute of Purchasing and Materials Management's PMI report is also expected.Lastly, Hong Kong will release its retail sales stats for April.WEDNESDAY, June 3Australia's first-quarter gross domestic product (GDP) data will dominate headlines Wednesday.Both Westpac and CommBank said they expect growth to have moderated during the first three months of the year, though their estimates differed.CommBank forecast a 0.2% quarterly rise in GDP, while Westpac projected 0.5%; both would be slower than the 0.8% growth recorded in the final quarter of 2025.Neighboring New Zealand will disclose first-quarter export and import price stats.Markets will also be following a speech by Bank of Japan Governor Kazuo Ueda for clues on the central bank's next interest-rate hike.Wednesday also features a heavy slate of macro data from Vietnam, including inflation, balance of trade, industrial production, and retail sales.Trading Economics expects Vietnam's May inflation to accelerate to 6% from 5.46% in April. Meanwhile, the data platform estimated the country's trade deficit could widen to $3.4 billion from $3.28 billion a month prior.Meanwhile, S&P Global will release the next batch of its PMI reports covering composite and services activity in China, India, Japan, Australia, and Hong Kong.THURSDAY, June 4Thursday will be relatively light on readouts, with Australia's April trade figures among the handful of releases of note.Australia is expected to post a trade surplus of A$2.6 billion in April, rebounding from a A$1.8 billion deficit in March - its first shortfall since late 2017, Westpac said in a preview.According to the bank, major commodity exports appeared to have increased notably during the period after recording three consecutive monthly declines.In Singapore, S&P Global's monthly PMI will be due, while Thailand will release a business confidence report.FRIDAY, June 5The tail end of the week brings a policy rate decision in India, which will also release its quarterly GDP growth figures.The Reserve Bank of India is expected to hold rates at 5.25% but could signal hawkish sentiment during its vote, the WSJ reported, citing a UOB economist.Meanwhile, a Trading Economics consensus placed the country's GDP growth rate at 7.3%, down marginally from the 7.8% recorded in the final quarter of 2025.ANZ Research said the economy stayed broadly healthy in the fiscal fourth quarter, although growth eased slightly in March as manufacturing, exports and profit margins came under pressure due to global disruptions, the WSJ reported.Taiwan is set to report monthly inflation data, with ING expecting consumer prices to rise above the 2% target for the first time since April 2025. The bank expects inflation to accelerate to 2.2% year on year in May from 1.7% in April, reflecting Taiwan's reliance on imported energy, which leaves the economy vulnerable to higher global prices."We expect inflation to peak toward the middle of this year, raising the risks for a potential central bank rate hike at the coming meetings," ING said in a preview.Thailand and the Philippines will similarly report their respective inflation rates for May, with the latter also releasing industrial production stats.Lastly, Singapore will report its retail sales figures for April.

Asia66d ago

Japanese Shares Hit Record Highs Led By Tech Stocks

Japanese shares crossed a record high of 67,000 in Monday's trade to close higher, tracking Asian peers that also posted gains driven by optimism over investments in artificial intelligence.The Nikkei 225 pared early gains to close up 604.83 points or 0.9% at 66,934.33.The focus on technology stocks helped overcome caution around the slow progress in the negotiations for a peaceful resolution of the ongoing geopolitical tensions in Iran.The gains were led by the SoftBank Group (TYO:9984), the investment company that focuses heavily on AI, closing up over 14% after extending its gains from last week. The surge in the company's share price on Monday helped SoftBank to push its market capitalization to over 47 trillion yen, making it the most valuable company on the Tokyo exchange for the first time in over two decades.It was also reported that on Sunday, SoftBank Group (TYO:9984) has committed to developing and operating 5 gigawatts of artificial intelligence data center capacity in France, with a pledge to invest up to 75 billion euros.Also, Japanese technology group Kioxia Holdings Corp (TYO:285A) closed higher by over 10%.In other corporate news, Kansai Electric Power (TYO:9503) plans to build new liquefied natural gas-fired plants as part of a broader push to increase generating capacity by about 30% by fiscal 2040, Nikkei Asia reported Monday, citing President Nozomu Mori.Also, Shionogi & Co's (TYO:4507) has received the US Food and Drug Administration's approval for its Xocova or ensitrelvir as the first and only oral antiviral for post-exposure prophylaxis of COVID-19 in individuals aged 12 and older, according to a Tokyo bourse filing on Monday.

Nikkei 225TYO:285ATYO:9503TYO:9984

Market Chatter: Japan Spent Record 11.73 Trillion Yen on Currency Intervention Over the Past Month

Japan deployed a record 11.73 trillion yen in market intervention over the four weeks through May 27 to prop up the yen after the currency tumbled past 160 per dollar, Bloomberg News reported on Saturday, citing Finance Ministry data.The total exceeded market expectations based on central bank flow data, and marked the government's first such action since 2024, said the news wire.A strategist at SMBC Nikko Securities noted that even with undisclosed action, the yen's continued weakness may strengthen arguments about the limitations of unilateral intervention, the publication said.More precise details on the timing and size of each operation are expected in early August when the ministry releases second-quarter figures, the report said.Next week's reserves data could reveal whether Japan sold US Treasury holdings to fund the purchases, a move that might concern US Treasury Secretary Scott Bessent due to potential upward pressure on American yields, it added.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

US Markets66d ago

Japan's Capital Spending Growth Grinds to a Halt in Q1

Japanese companies' capital spending was flat year over year in the first quarter, compared with the 6.5% growth in the previous quarter, according to government data released Monday.The result missed market expectations for a 4.1% increase, according to Investing.com.Capital spending fell 2% on a seasonally adjusted quarterly basis, the data showed.Meanwhile, manufacturers' spending declined 0.4% from a year earlier.Despite the weak investment figures, corporate sales rose 1.1% year over year, while ordinary profits increased 14.6%.The Iran war has rattled the global economic outlook, with oil prices surging after Tehran effectively closed the Strait of Hormuz, leaving energy-import-dependent Japan particularly vulnerable to the resulting supply shock."Capital spending came in significantly weaker than expected. While it's too early to say for certain, we may be starting to see some impact from the Middle East conflict," Yuichi Kodama, chief economist at Meiji Yasuda Research Institute, was quoted as saying by Bloomberg News."It's also possible that some companies decided at the last minute to hold back planned investment," Kodama added.The Ministry of Finance survey is closely watched as an indicator of corporate investment trends and broader economic activity in Japan.The figures will be used in revised gross domestic product data for the January-March quarter due on June 8.Preliminary data showed Japan's economy expanded at an annualized real rate of 2.1%, marking a second consecutive quarter of growth.The data leaves room for debate as the Bank of Japan's outlook weighs further interest rate increases.Recent hawkish remarks from BOJ policymakers have prompted investors to price in roughly a 79% chance of a rate increase at the June 15-16 meeting."Results were weaker than expected, reflecting a pullback from earlier strength," Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, was quoted as saying by Reuters."But given steady demand for labor-saving investments and similar areas, capital expenditures are unlikely to deteriorate sharply from here," he added, noting that the outlook would depend on developments in the Middle East.

Japan's Manufacturing Activity Growth Eases in May as Firms Stockpile Amid Middle East Tensions

Growth in Japan's manufacturing sector slowed slightly in May, although output continued to rise as companies built up inventories to shield against global supply chain disruptions caused by the Middle East conflict.The headline S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) slipped to 54.5 in May from 55.1 in April.However, the sector remained in expansion territory, staying well above the neutral 50-point threshold, according to S&P Global's press release on Monday."Delving into the details of the survey showed that the current period of expansion is being partly driven by stock building among manufacturers and their clients, as companies looked to safeguard against product shortages and mitigate price risks driven by the war in the Middle East," Annabel Fiddes, S&P Global Market Intelligence's economics associate director, said.The survey noted increased demand for semiconductors and oil-based products. This aligns with official Ministry of Finance data, which showed that April chip exports surged 41.6% year over year to 776.1 billion yen, helping drive total exports up 14.8% to 10.51 trillion yen.Despite the stronger global demand, however, the growth rate of total new orders softened, the ratings firm noted.To prepare for potential shortages and supplier price hikes, manufacturers increased their purchasing activity to a four-year high in May, survey data showed. Firms also expanded their workforces to meet production needs.Recent government data showed Japan's unemployment rate dropping to 2.5% in April, the lowest since July 2025, from 2.7% in March. The number of unemployed individuals fell to 1.8 million, while seasonally adjusted employment rose to 68.8 million from 68.2 million the previous month.On the inflation front, average input costs, particularly for metals and oil-based products, climbed to their highest level since September 2022, S&P Global said.While business sentiment edged higher in May compared with April, it remained below its historical average."Although manufacturers generally anticipate reaping further gains from strong growth in areas such as AI and electronics, surging costs and subdued global economic conditions could act as headwinds in the months ahead," Fiddes added.

Asia66d ago

Japanese Shares Open Higher as Middle East Tensions Persist

Japanese equities edged upward at the start of Monday's trading session amid the ongoing instability in the Middle East and stalled progress in US-Iran ceasefire negotiations.The Nikkei 225 advanced to 66,363.43 shortly after the opening bell.At home, sentiment among Japan's largest corporations showed signs of weakening. Driven by rising uncertainty over regional turmoil, businesses pulled back on capital investment during the first quarter.According to Finance Ministry data released Monday, capital outlays excluding software dropped 3.5% quarter-on-quarter for the three-month period ending in March.Non-manufacturers reduced their spending by 5.1% compared to the previous quarter, while manufacturers posted a more modest decline of 0.3%.

Japan's Manufacturing PMI Advances in May, S&P Global Data Shows

Japan's manufacturing production expanded in May, S&P Global said Monday.The latest S&P Global Japan Manufacturing PMI came in at 54.5, compared with 55.1 in April, matching the flash data.The reading indicated improvement in overall business conditions, despite slipping from April's 51-month high.

Japan Logs Zero Growth in Q1 Corporate Spending

Japanese companies' capital spending in the first quarter recorded no growth on an annual basis, compared with 6.5% growth in the preceding quarter, government data showed Monday.The consensus estimate was for a 4.1% growth, according to Investing.com.The Ministry of Finance report is a closely watched early indicator of economic health in Japan.

Hang SengNikkei 225Shanghai Composite

Persian Gulf, Tech Outlooks Fuel Asian Stock Markets

Asian stock markets rallied on Friday, on prospects that the Strait of Hormuz may soon open to oil-tanker traffic, pursuant to a pending Iran-US ceasefire arrangement.Hong Kong and Tokyo finished in the green, while Shanghai lagged. Other regional exchanges largely gained ground, with new all-time highs set on equity indices in Seoul and Taiwan.Brent crude oil futures traded near $91.38 a barrel, off 1.3%, during Asian trading hours.In Japan, the Nikkei 225 opened higher and rose to the close, finishing up 2.5% on media reports that Tehran and Washington have tentatively agreed to extend a ceasefire for 60 days.The benchmark Nikkei 225 rose 1,636.38 to 66,329.50, to strike a fresh all-time zenith, as gaining issues outnumbered losers 162 to 61.Leading the upside was silicon-wafer maker Sumco, up 19.3%, while Mitsubishi Motors declined 8.5%.In economic news, Tokyo's consumer price index-core (CPI-core) that strips out fresh food bills, rose 1.3% on year in May, reported the Statistics Bureau.The nation's unemployment rate fell to 2.5% in April from 2.7% in March, added officials.The nation's retail sales in April grew 2.1% on-year, and industrial production in Japan increased by 2.3% in April on year, reported the Ministry of Economy Trade & Industry (METI).In Hong Kong, the Hang Seng Index opened higher and held ground, finishing up 0.7% on strength in property issues.The broad gauge Hang Seng rose 176.23 to 25,182.39, as gaining issues outnumbered losers 64 to 25. The Hang Seng TECH Index lost 0.1% on the day, while the Mainland Properties Index rose 2%.Leading the upside was computer-maker and AI-hardware maker Lenovo, gaining 22%, while Semiconductor Manufacturing International declined 7.5%.On the mainland, the Shanghai Composite fell 0.7% to 4,068.57.On the other regional exchanges, the S. Korean KOSPI rose 3.6%; the Taiwan TWSE inclined 2.5%; the Australian ASX 200 inclined 1.6%; the Singapore Straits Times Index rose 1%, and the Thai Set was steady. In late trading in Mumbai, the Sensex was down 1.4%.The MSCI All Country Asia Pacific Index rose 1.7% on the day.

Nikkei 225Shanghai Composite^SZSE

Market Chatter: Chinese Tungsten Exports to Japan Halve in April

China's exports of tungsten to Japan halved in April from the 2025 monthly average following Beijing's export restrictions on the mineral, Nikkei Asia reported Friday.The restrictions forced Japanese firms to look for other sources of the metal, increasing imports of tungsten scrap from the U.S. and elsewhere, the report said.Tungsten is used to manufacture carbide tools for aircraft and automobile parts, the report said.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Japan's Consumer Confidence Edges Up in May

Japan's consumer confidence index rose to 33.6 in May from 32.2 in the previous month, Cabinet Office data showed Friday.The overall livelihood index climbed 3 points month on month to 31.2, while the income growth index edged up 0.5 points to 40.3.The employment index increased 0.9 points to 38.3, while willingness to buy durable goods rose 1.2 points to 24.4.Looking ahead, 93.5% of respondents expect prices to go up, while 1.9% anticipate a decline and 2.6% expect prices to stay the same, the report said.

Nikkei 225TYO:7731TYO:8031

Japanese Shares End Week With Gains on Hopes of US-Iran Ceasefire Extension

Japanese shares ended the week on a high, closing with gains on Friday, driven by optimism in global markets over a tentative 60-day ceasefire extension and renewed nuclear talks between the US and Iran.The Nikkei 225 closed up 1,636.38 points or 2.5% at 66,329.50.The drop in oil prices, with Brent crude falling towards $93 per barrel, also helped to lift investor sentiment.News platform Axios reported that the U.S. and Iran agreed on a 60-day memorandum ⁠of understanding to extend the ceasefire and launch negotiations on Iran's nuclear program. However, US ⁠President Donald Trump has yet to give final approval to the proposals.If approved, the deal will allow unrestricted shipping through the Strait of Hormuz, easing trade woes.Domestic investor mood was uplifted by the growth in Japan's retail sales by 2.1% year-on-year to 13.217 trillion yen in April, according to preliminary data from the Ministry of Economy, Trade, and Industry on Friday.The ministry also released data that showed Japan's industrial production index rose at a seasonally adjusted 0.8% in April from the month prior, and increased 2.3% from a year ago.Also, Japan's unemployment rate eased to 2.5% in April compared with the previous month's 2.7%, according to government data released on Friday.On the corporate side, Mitsui & Co (TYO:8031) plans to expand its liquefied natural gas investments across the Middle East, the U.S., and Australia, as the Japanese trading giant responds to surging electricity demand from data centers worldwide, Bloomberg News reported on Friday, citing CEO Kenichi Hori.Also, Nikon (TYO:7731) aims to revive its semiconductor photolithography business by offering lower prices than Dutch rival ASML, which controls over 80% of the market, Nikkei Asia reported on Friday, citing newly appointed president and CEO, Yasuhiro Ohmura.

US Markets69d ago

Tokyo's Core Inflation Hits Lowest Since 2022

Tokyo's core consumer prices rose 1.3% year over year in May, slowing from 1.5% in April, according to data released Friday.The reading in Japan's capital marked the slowest pace since March 2022 and came in below market expectations.Inflation remained below the Bank of Japan's 2% target for a fourth consecutive month, as government fuel subsidies and favorable base effects helped offset higher raw material and energy costs linked to the conflict in the Middle East.An inflation gauge closely watched by the Bank of Japan, which excludes both fresh food and energy, rose 1.6% in May from a year earlier, easing from 1.9% in April.The Tokyo inflation gauge is widely viewed as a leading indicator of nationwide consumer prices.The figures will be among the indicators the central bank will scrutinize at its next policy meeting, where markets expect it to raise its short-term policy rate to 1% from 0.75%."The April activity data show that Japan's economy is shrugging off the energy cost shock and cement the case for a BOJ rate hike next month," Marcel Thieliant, head of Asia-Pacific at Capital Economics, said, according to Reuters.Despite the softer inflation reading, analysts expect price pressures to reaccelerate in the coming months as higher oil prices and rising import costs from a weaker yen filter through the economy."There is no strong momentum in inflation, but upside risks are looming large due to the Iran conflict," Yoshiki Shinke, senior executive economist at Daiichi Life Research Institute, was quoted as saying by Bloomberg News.Bank of Japan Governor Kazuo Ueda recently met Prime Minister Sanae Takaichi and agreed to maintain close communication on monetary policy, although he said they did not discuss the possibility of a June rate increase.Recent hawkish remarks from BOJ policymakers have nevertheless prompted investors to price in roughly an 80% chance of a rate increase at the June 15-16 meeting.

Japan Retail Sales Accelerate in April

Japan's retail sales grew 2.1% year-on-year to 13.217 trillion yen in April, preliminary data from the Ministry of Economy, Trade, and Industry on Friday showed.The reading is higher than the 1.4% growth rate the prior month and is the highest in 12 months.Retail sales climbed 0.2% in food and beverage, surged 15.4% in motor vehicles, jumped 5.5% in machinery and equipment, but contracted 9% in fuel.Further, commercial sales gained 5.4% on year to 55.64 trillion yen, while wholesale trade jumped 6.5% to 42.423 trillion yen, the data showed.

Japan's Industrial Production Edges Up 0.8% in April

Japan's industrial production index rose at a seasonally adjusted 0.8% in April from the month prior, and increased 2.3% from a year ago, the Ministry of Economy, Trade and Industry said on Friday.The monthly decrease was mainly contributed by general-purpose and business-oriented machinery, electrical machinery, and information and communication electronics equipment and other manufacturing.The shipments in Japan climbed by a seasonally adjusted 1.5% compared with March, while inventories slipped 0.2% month on month.On year-on-year basis, shipments increased by 2% and inventories dropped 4.9%.

US Markets69d ago

Japan's Jobless Rate Falls to Nine-Month Low in April

Japan's unemployment rate eased to 2.5% in April from 2.7% in March, according to government data released Friday.The latest print was also below market expectations and marked the lowest jobless rate since July 2025.The number of employed people rose to a seasonally adjusted 68.8 million from 68.2 million a month earlier, while the number of unemployed fell to 1.8 million from 1.9 million.The labor market data came as Japan's key inflation gauge showed signs of easing.Core consumer prices, which exclude fresh food, rose 1.4% in April from a year earlier, the slowest pace in four years and below economists' expectations.The softer inflation reading was partly attributed to government measures to ease cost-of-living pressures, including energy subsidies, and could complicate expectations for a near-term Bank of Japan rate hike."This data leaves room for debate whether there is a pressing need for the BOJ to raise rates soon," Taro Saito, head of economic research at NLI Research Institute, was quoted as saying by Bloomberg News."Of course, you can argue that a real rate is too low, so more hikes are justified," he added.Meanwhile, Bank of Japan Governor Kazuo Ueda earlier this week cautioned against drawing simple conclusions from the recent surge in energy prices, saying the inflationary impact would depend on a range of factors beyond oil costs alone."Central banks should not look at oil prices in isolation. The same oil price increase can have very different effects depending on wages, expectations, demand, and exchange rates," Ueda said.Ueda stopped short of signaling the timing of the central bank's next policy move, even as policymakers have become increasingly concerned about higher crude oil prices stemming from tensions in the Middle East and their potential impact on inflation."Looking ahead, higher oil prices will likely ripple through a broad range of items, keeping the Bank of Japan on guard against inflation overshoots. We still expect the BOJ to raise its policy rate to 1% in June," Taro Kimura said, according to Bloomberg.

Japan's Unemployment Rate Cools to 2.5% in April

Japan's unemployment rate eased to 2.5% in April compared with the previous month's 2.7%, according to government data released on Friday.The data showed that the number of people employed in April increased to a seasonally adjusted 68.76 million from 68.15 million the month prior, while the number of jobless people declined to 1.79 million from 1.86 million a month ago.

Japanese Stocks Rise at Open on US-Iran Ceasefire Extension

Japanese equities climbed at Friday's open following news of a tentative 60-day ceasefire extension and renewed nuclear talks between the US and Iran.The Nikkei 225 rose 440.9 points or 0.7% to reach 65,133.97 at the opening bell.Oil prices eased slightly on Friday, with Brent crude falling 0.6% to settle at $93.71 a barrel. The development fueled cautious optimism that the three-month-long conflict could be moving toward a resolution, although President Donald Trump has not yet approved the terms.At home, Tokyo's core consumer price index, which excludes fresh food, rose 1.3% in May from a year earlier, marking the slowest pace in four years. The latest print complicates efforts by Bank of Japan policymakers to build a case for raising interest rates as early as next month.

Tokyo Inflation Slows to Four-Year Low in May

Tokyo's core consumer price index, which excludes fresh food, rose 1.3% in May from a year earlier, marking the slowest pace in four years, according to official government data on Friday.The reading marks the sixth consecutive month of cooling in the capital.Excluding both fresh food and energy, the print showed a 1.6% rise compared with 1.9% in April.Headline CPI, which includes all items, grew 1.4%, slower than the 1.5% rise in April.