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Asian stocks fall on weak China data and plunging copper price

Asian stocks fell on Thursday, after weaker than expected Chinese data and a drop in copper prices. Investors also weighed the impact of a new trade agreement between South Korea & the U.S.

Investors weighed the Federal Reserve's decision to keep rates unchanged and megacap tech companies' strong earnings when determining whether or not to buy the dollar.

Nasdaq Futures soared 1.2% after Microsoft and Meta Platforms reported earnings that were better than expected. S&P futures rose 0.8% while the U.S. Dollar held steady following a two-month peak.

Tony Sycamore is a market analyst with IG Sydney. He said that both companies' earnings reports have "shot the lights out", reporting increased revenue from cloud computing, and AI-enabled ad targetting, respectively.

The broadest MSCI index of Asia-Pacific stocks outside Japan fell 0.7% but is still on course for a fourth consecutive monthly increase in July.

Hong Kong and China stocks led the declines following official PMI gauges showing weaker than expected economic activity in July.

The markets are now waiting for the Bank of Japan to announce its monthly policy decision in the afternoon. Traders will be looking for any clues that Governor Kazuo ueda might give about the probability of another rate increase this year.

The Federal Reserve’s rate-setting panel voted on Wednesday 9-2 to keep interest rates unchanged for the fifth meeting in a row. Two Fed governors dissented for the first time since more than 30 years.

The comments made by Fed chair Jerome Powell after the decision undermined confidence that borrowing rates would start to drop in September.

Citi analysts said that it would take two months for Fed officials to be convinced that tariff effects are only going to lead to modest one-time increases in prices and that the policy rate should move toward neutral.

The dollar index stood at 98.812, just below the high of 99.987 that was reached on Wednesday. The index will clock its first gain in 2025, a 3.1% increase for the month.

"Although Federal Reserve kept rates at their recent rate setting decision the possibility of rate reductions at upcoming meetings remains alive as they balance the softening economy data with the possible for persistent inflation," Manusha Samanthaweera, Fixed Income Investment Director at Capital Group.

The U.S. Gross Domestic Product growth was higher than expected during the second quarter. However, the report's details painted a picture that showed an economy in decline due to the uncertainty caused by Trump's protectionist policy.

The Korean won increased by 0.3% following Trump's announcement that the U.S. would charge a 15 percent tariff on South Korean imports in exchange for South Korea investing $350 billion into U.S. projects, and purchasing $100 billion of U.S. Energy Products.

This announcement is just the latest in a long line of deals on trade policy that were rushed to be announced before the August 1 deadline, so as to avoid the impositions of "Liberation Day", April 2, tariffs. These deals continue cast a shadow over global markets.

The price of copper futures fell 19.4% when Trump announced that the U.S. would impose a tariff of 50% on copper pipes, wiring and other copper products. However, the details of this levy were not as comprehensive as expected, and did not include copper input materials like ores, concentrates, and cathodes.

Trump announced on Wednesday that trade negotiations with India were still in progress after previously announcing the U.S. would impose a 25 percent tariff on products imported from India.

The U.S. is also going to suspend its "de minimis exemption" that allowed low value commercial shipments to ship to the United States with no tariffs. Tax breaks are a major part of China's low cost e-commerce platforms, such as Shein or PDD's Temu.

Oil prices rose on Thursday for the fourth consecutive day, as investors were worried about supply shortages, amid Trump's call for a quick resolution of the Ukraine war and his threats to impose tariffs on countries that buy Russian oil.

Brent crude futures, due to expire Thursday, climbed 0.33% to $73.48 a barrel, while U.S. West Texas Intermediate Crude for September rose 0.21% to $70.15 a barrel.

(source: Reuters)