Asia stock markets trade in red on Monday, followed President Trump's announcement on Friday of plans to raise steel import tariffs from 25% to 50%, effective Wednesday, framing it as a step to reduce reliance on China. The selloff followed renewed U.S.-China trade tensions after Beijing today accused Washington of “seriously violating” a truce reached in May and vowed “strong and resolute measures” in response. This came after President Trump claimed Friday that China had “totally violated” the agreement, pointing to reduced rare earth exports. On the Geopolitical front, Ukraine launched drone attacks on four military airports inside Russia, destroying over 40 warplanes, while Russia pounded Ukraine with missiles and drones. All this comes as the two sides prepare to meet in Istanbul for a second round of peace talks later today. Gold prices rose above $3,310 per ounce on Monday. Japan ( NKY:IND ) fell 1.29% to below 37,500 while the broader Topix Index lost 0.9% to 2,777 on Monday, declining for the second consecutive session as renewed tariff threats from US President Donald Trump rattled markets. The Japanese yen strengthened to around 143.5 per dollar on Monday, marking its third consecutive session of gains. The au Jibun Bank Japan Manufacturing PMI was revised higher to 49.4 in May 2025, from 49.0 in the preliminary estimate and up from 48.7 in the previous month, though it was the softest decline since last December, as the downturn in new orders eased while output shrank modestly. Separately, capital expenditure by Japanese companies rose sharply in the first quarter of 2025, climbing 6.4% year-on-year On Friday, US President Trump threatened to double steel and aluminum import tariffs to 50% starting June 4, causing pressure on Japanese steelmakers JFE Holdings and Kobe Steel, while Nippon Steel was less affected by Trump's positive remarks on its planned merger with US Steel. China ( SHCOMP ) market closed, the offshore yuan fell to around 7.21 per dollar on Monday, marking its second straight session of losses as trade tensions resurfaced. The latest Chinese PMI data indicates stabilization, but recovery remains fragile due to weak domestic demand and ongoing trade tensions. China's PMI data showed manufacturing rose to 49.5 from 49.0 and the composite index edged up slightly to 50.4, while services slipped to a four-month low of 50.3. Separately, trade tensions escalated after China accused the US of violating a May truce, and Trump accused China of breaching a Geneva agreement. Trump's adviser suggested a talk with Xi could happen this week, but no timeline is confirmed. Hong Kong ( HSI ) fell 1.63% to 22,774 in early trade on the first trading day of June, marking the second straight session of losses and hitting a three-week low. India ( SENSEX ) fell 0.52% to 80,973 in early trading on Monday, marking the second consecutive session of losses, primarily dragged down by the metal sector. The HSBC India Manufacturing PMI was revised down to 57.6 in May 2025 from 58.2 in April, below the preliminary estimate of 58.3. Australia ( AS51 ) fell 0.25% at 8,434 on Monday, following gains from the previous week, as investors digested the latest PMI figure. The Australian dollar rose to around 0.646 on Monday. In Australia, the S&P Global Australia Manufacturing PMI weakened to 51 in May 2025 from 51.7 in April, falling for the second straight month to the lowest level since February. In the U.S., on Friday, all three major indexes ended mixed as investors weighed renewed trade tensions with China and cooling inflation data. Market participants are now turning their focus to a series of upcoming US economic data releases—including the highly anticipated monthly jobs report on Friday—which may offer further insight into the economic impact of shifting trade policies. U.S. stock futures dipped slightly on Monday as investors looked for fresh catalysts at the start of a new trading month: Dow -0.54% ; S&P 500 -0.66% ; Nasdaq -0.76% . Currencies: ( JPY:USD ), ( CNY:USD ), ( AUD:USD ), ( INR:USD ), ( HKD:USD ), ( NZD:USD ). More on Asia: China's factory activity contracts again; recovery fragile amid weak demand & trade tensions China 'firmly rejects' Trump's accusation on Geneva trade deal breach Japan's May manufacturing PMI revised up to 49.4; new orders decline less, output modestly shrinks Treasury Secy Bessent: China holding back products essential for industrial supply chains Japan sees strongest retail sales in 3 months; factory output contraction eases; Tokyo core inflation tops forecasts
