Asian stocks traded in tight ranges on Tuesday after mixed business activity data from China, while Australian shares moved little as the Reserve Bank kept rates unchanged and flagged persistent inflation risks.
Regional sentiment was supported by Wall Street’s overnight gains, driven by strong technology stocks. However, worries over a potential U.S. government shutdown capped upside momentum. Pressure also came from President Donald Trump’s announcement of fresh trade tariffs on lumber and wood products. S&P 500 futures edged lower in Asian trade.
Chinese markets steady as investors weigh PMIs
China’s CSI 300 rose 0.2% and the Shanghai Composite gained 0.4%, while Hong Kong’s Hang Seng slipped 0.2%. Trading volumes were muted ahead of the National Day holiday starting Wednesday.
Government PMI data showed manufacturing contracting for the sixth month in a row, while services growth slowed. In contrast, private PMI readings pointed to the sharpest manufacturing expansion in six months, alongside robust services growth.
Analysts noted that government and private PMIs cover different sets of companies and regions, meaning investors use both to get a full view of the economy. Still, the weakness in official PMIs could push Beijing toward more stimulus, especially as earlier policy support fades.
Australia flat as RBA holds rates
Australia’s ASX 200 was flat as the Reserve Bank of Australia left rates steady at 3.60%. Policymakers highlighted sticky inflation and a cooling labor market as reasons for the pause. All board members voted unanimously to hold rates.
The RBA said inflation may overshoot forecasts in the September quarter and emphasized the need for more time to assess the impact of earlier cuts. Since the start of 2025, the bank has lowered rates by 75 basis points.
Capital Economics analysts said the RBA’s tone sounded cautious and raised doubts about another cut in November. Still, they maintained that more easing is likely given weak private demand and sluggish growth.
Wider Asian markets remain cautious
Japan’s Nikkei 225 rose 0.1% and the TOPIX gained 0.4%, though both indexes were weighed down by a stronger yen that hurt exporters. Industrial production and retail sales data in Japan also missed expectations, underscoring growth concerns.
India’s Nifty 50 traded flat as investors awaited the Reserve Bank of India’s policy decision on Wednesday. South Korea’s KOSPI was steady, while Singapore’s Straits Times index rose 0.2%. South Korean industrial output and retail sales also disappointed in August, pointing to further weakness in demand.
