MSCI AC Asia Pacific Index falls 1% to 208.65

MSCI AC Asia Pacific Index falls 1% to 208.65

The MSCI AC Asia Pacific Index, a key benchmark for the region's stock markets, experienced a 1% decline to 208.65 on July 2, 2025. The drop was influenced by a combination of factors, including the ongoing trade negotiations and the broader economic outlook.

Optimism over trade deals has bolstered bullish sentiment across Asia-Pacific stock markets. The announcement of a new trade agreement between the US and Japan, featuring a reduced tariff rate of 15% on Japanese imports and a significant Japanese investment commitment of US$550 billion into the US, has provided a positive boost [1]. However, the index's performance was also affected by the broader economic landscape and the impact of the trade negotiations between the US and China.

Japan's Nikkei 225 surged 3.7% intraday, reaching a 12-month high, while Hong Kong's Hang Seng Index rose 1% to near a four-year high, buoyed by speculation of an extension to the US-China trade truce beyond the 12 August deadline [1]. These positive movements were somewhat offset by the broader market sentiment, which was influenced by the ongoing trade negotiations and the broader economic outlook.

The US dollar traded mixed during the Asia session following a two-day decline in the Dollar Index, which fell to 97.40, breaching its 20-day moving average of 97.60 [1]. Risk-on currencies outperformed, with the New Zealand dollar gaining 0.2% and the Australian dollar 0.1%, while safe havens like the Japanese yen and Swiss franc each slipped 0.2% against the greenback.

The yen's softness was reinforced by dovish comments from BoJ Deputy Governor Uchida, who signaled no urgency to raise interest rates, even after the US-Japan trade announcement, dampening the currency's appeal in a risk-on environment [1]. Meanwhile, gold pulled back from a five-week high amid optimism and overbought signals, maintaining its short-term bullish structure with key support at US$3,385/3,360 [1].

Crude oil extended its losses despite the risk-on tone, sliding -0.3% intraday to US$66.30, marking its fourth consecutive daily decline [1]. Prices are now nearing critical range support at US$65.20, suggesting the potential for a bearish breakdown.

In conclusion, the MSCI AC Asia Pacific Index's decline reflects a mix of positive trade developments and broader economic concerns. The index's performance will continue to be influenced by the ongoing trade negotiations and the overall economic outlook in the region.

References:
[1] https://www.marketpulse.com/markets/asia-midday-asia-stocks-rally-on-us-japan-trade-deal-nikkei-hits-12-month-high-wti-extends-decline-chart-of-the-day/