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At a glance:
The yen weakened after PM Takaichi’s weekend comments on the benefits of a weak currency, before stabilising later in the session.
Japan’s manufacturing PMI surprised to the upside, rising to its strongest level since 2022.
China’s official PMIs slipped back into contraction, contrasting with firmer private PMI data and renewed yuan internationalisation rhetoric from President Xi.
Oil prices traded heavy after OPEC+ held March output steady and offered no guidance beyond Q1.
Asia-Pac equities were pressured by China data, Korea volatility, India’s budget shock, and tech weakness, with Japan the main outlier.
Bitcoin continued to sell lower.
The yen came under pressure after Prime Minister Takaichi’s weekend comments that a weak currency can be a major opportunity for export industries. USD/JPY climbed to highs around 155.45 before easing back toward Friday’s closing levels near 154.80–85. Later in the session, Japan’s manufacturing PMI data arrived, rising to 51.5 in January from 50.0, marking the strongest improvement since 2022.
More broadly across FX, the US dollar was little net changed.
From China over the weekend, President Xi Jinping renewed calls for the yuan to attain a global reserve currency status, backing expanded trade settlement and alternative payment systems. At the same time, official PMI data showed both manufacturing and services activity slipping back into contraction in January, underscoring ongoing weakness in domestic demand. That contrasted with private data later in the session, as the RatingDog manufacturing PMI rose to 50.3, signalling modest expansion for a second consecutive month.
Oil prices traded on the heavy side. OPEC+ agreed to hold output policy steady for March, extending the first-quarter pause in planned production increases. The group offered no guidance beyond March, keeping optionality high amid uncertainty around Iran and the global demand outlook. President Trump said the US and Iran would hold talks, a message echoed by unnamed US officials.
The Bank of Japan’s January Summary of Opinions showed comments on a moderate economic recovery and ongoing inflation pressures, with policymakers indicating that gradual rate increases would be appropriate if current forecasts are realised.
In Australia, manufacturing PMI rose to a five-month high in January, while the Melbourne Institute Inflation Gauge increased 0.2% m/m (previously 1.0%). The annual pace edged up to 3.6% y/y, keeping inflation concerns alive as markets debate the risk of an RBA rate hike on February 3.
Asia-Pacific equities were broadly pressured amid several bearish themes, including the partial US government shutdown, the surprise contraction in China’s official PMIs, and lingering fallout from the recent historic collapse in precious metals. Sentiment was also dented by tech-related weakness following reports that Nvidia’s planned USD 100bn investment in OpenAI had stalled.
South Korea saw sharp volatility, with authorities briefly halting program trading on the KOSPI for five minutes after futures dropped 5%. The KOSPI fell 5% on the day, led by sharp losses in Samsung and SK Hynix, marking its biggest fall since November 2021.
US equity index futures fell in thin Sunday evening trade. Japan’s Nikkei was a notable exception, supported by the weaker yen and expectations of Takaichi-led fiscal stimulus.
Oracle is to raise up to US$50bn in 2026 to expand cloud infrastructure.
In India, a hike in derivatives transaction taxes announced in the budget slammed equities during a special Sunday trading session. The Nifty 50 fell about 1.96% and the Sensex dropped around 1.88%, marking the worst Budget-day performance in six years.
Bitcoin continued to lose ground.
Asia-Pac stocks:
- Japan (Nikkei 225) -0.48%
- Hong Kong (Hang Seng) -2.4%
- Shanghai Composite -1.3%
- Australia (S&P/ASX 200) -1% (ps. Reserve Bank of Australia interest rate statement due Tuesday local time)
RBA due at 0330 GMT on Tuesday, February 3, 2026 / 2230 US Eastern time on Monday, February 2, 2026
