Session Flow: Asian markets opened with a mixed bias as investors digested conflicting signals from China's manufacturing sector. The Shanghai Composite slipped in early trade while Japanese equities showed modest gains, supported by a rebound in export-related names. Trading volumes remained elevated in the foreign exchange segment as participants positioned ahead of key US economic data due later in the week.
Macro Drivers: China's manufacturing PMI came in below expectations at 50.2, barely maintaining expansion territory and raising concerns about the durability of the recovery. This weighed on the yuan, which depreciated against the dollar. Meanwhile, Malaysia reported stronger-than-expected trade surplus figures, bolstering the ringgit. Japan's retail sales data showed modest improvement, providing some support to the yen though the currency remained near recent troughs. South Korea's industrial production figures offered a mixed picture, with semiconductors offsetting weaknesses in other sectors.
Currency Strength Themes: The Malaysian ringgit emerged as a top performer, bolstered by export optimism and foreign inflows into local bonds. The Indonesian rupiah faced renewed pressure amid elevated inflation expectations, while the Philippine peso maintained its recent range. The Australian dollar garnered support from rising commodity prices, though gains were capped by broader risk sentiment. The yen continued to languish as market participants scaled back BOJ tightening expectations following dovish central bank commentary.
Risk Sentiment and Commodities: Gold held firm near the $2,350 level as geopolitical tensions and dollar weakness supported safe-haven demand. Base metals traded mixed with copper declining on China demand concerns while aluminum found support from supply constraints. Crude oil steadied around the $78 per barrel mark as OPEC+ production policies remained in focus. Iron ore futures slipped below $120 per tonne amid inventories buildup at Chinese ports.
Regional Indices and Crypto: Japanese indices advanced with the Nikkei leading gains on semiconductor strength. Korean equities saw profit-taking after recent rallies, with the Kospi trimming early gains. Indian markets showed resilience, with the Nifty holding above key technical levels. Bitcoin consolidated in the $67,000 area as institutional demand remained steady, while ether lagged on network upgrade uncertainties.