Asian stocks slide as weak China data, copper plunge rattle markets

Asian equities slipped on Thursday after weaker-than-expected Chinese activity data and a plunge in copper prices, while investors weighed a trade deal between South Korea and the US

The dollar held near a two-month high as investors weighed a Federal Reserve decision to hold rates steady and strong earnings from megacap tech firms.

Nasdaq futures surged 1.2 per cent higher after better-than-expected earnings from Microsoft and Meta Platforms. S&P 500 futures advanced 0.8 per cent, while the US dollar held steady after hitting a two-month high. 

Both companies' earnings reports "have shot the lights out", reporting higher revenue from cloud computing and AI-enabled ad targeting respectively, said Tony Sycamore, a market analyst at IG in Sydney.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.7 per cent, though still on track for its fourth consecutive monthly gain in July.

Stocks in Hong Kong and China led declines after official PMI gauges showed weaker-than-expected economic activity during July.

Markets are now awaiting the Bank of Japan's monthly policy decision later in the day, with traders looking for any hints that Governor Kazuo Ueda may offer on the likelihood of another rate hike this year.

The Federal Reserve's rate-setting committee voted 9-2 on Wednesday to hold interest rates steady for the fifth consecutive meeting, with two Fed governors dissenting for the first time in more than three decades.

Fed Chair Jerome Powell's comments after the decision undercut confidence that borrowing costs would begin to fall in September.

"It will take the next two months of data to convince Fed officials that tariff effects will only lead to modest, one-time price increases and that policy rates should head toward neutral," analysts from Citi said in a note.

The dollar index was at 98.812, just shy of the two month high of 99.987 it touched on Wednesday. The index is set to clock a 3.1 per cent gain for the month, its first in 2025.

"Although the Federal Reserve decided to keep rates steady at its recent rate setting decision, the chance of rate cuts at upcoming meetings remain live as they balance softening economic data with the potential for persistent inflation," said Manusha Samaraweera, fixed income investment director at Capital Group.

US gross domestic product growth rebounded more than expected in the second quarter, but the details of the report painted a picture of an economy that was losing steam plagued by uncertainty from Trump's protectionist trade policy.

The Korean won appreciated 0.3 per cent after Trump said the US will charge a 15 per cent tariff on imports from South Korea, which will in return invest $350 billion in US projects and purchase $100 billion in US energy products.

The announcement is the latest in a series of trade policy deals rushed out before an August 1 deadline to avert the imposition of the April 2 "Liberation Day" tariffs. These deals continue to cast a shadow on global markets.

Copper futures plunged 19.4 per cent after Trump said the US will impose a 50 per cent tariff on copper pipes and wiring, as the details of the levy fell short of the sweeping restrictions expected and left out copper input materials such as ores, concentrates and cathodes.

Trump said on Wednesday negotiations on trade with India are still under way after announcing earlier the US will impose a 25 per cent tariff on goods imported from the country.

Meanwhile, the US will also suspend its "de minimis" exemption that allowed low-value commercial shipments to be shipped to the United States without facing tariffs. The tax break is a mainstay of China's low-cost e-commerce platforms such as Shein and PDD's Temu.

In commodities, oil prices rose for a fourth straight day on Thursday, as investors worried about supply shortages amid Trump's push for a swift resolution to the war in Ukraine and threats of tariffs on countries buying Russian oil. [O/R]

Brent crude futures for September delivery, which are set to expire on Thursday, rose 0.33 per cent, to $73.48 a barrel, while US West Texas Intermediate crude for September gained 0.21 per cent to $70.15 a barrel.