Asian equity markets opened Friday, August 1, 2025, with a clear divergence in performance, as Japan’s Nikkei rallied to fresh highs while key indices in China, India, and South Korea retreated.

Investors are digesting a mix of strong corporate earnings from Japan, a weakening yen, and renewed economic concerns in China. Currency fluctuations across the region also added volatility to early trading.

Japan Surges Past 41,000 as Yen Weakens

The Nikkei 225 jumped 1.02% to 41,069.82, marking another record high and extending July’s winning streak. Investor sentiment remains buoyant following upbeat earnings results from major exporters and tech firms.

The rally was further supported by currency tailwinds. The Japanese Yen Index fell 0.84% to 66.34, making Japanese goods more competitive globally and improving corporate profit forecasts.

Key drivers behind the Nikkei rally:

• Strong quarterly results from tech and automotive exporters
• Continued depreciation of the yen against the U.S. dollar
• Robust foreign inflows into Japanese equities

Australian Markets Dip; AUD Slips Slightly

Australia’s S&P/ASX 200 edged lower by 0.16% to 8,742.80, dragged down by weakness in energy, real estate, and mining sectors. The move comes despite relatively stable global commodity prices.

Meanwhile, the Australian Dollar Index dipped 0.13% to 64.28, as traders await domestic inflation data and further signals from the Reserve Bank of Australia regarding rate guidance.

South Korea and India Retreat on Caution

South Korean and Indian markets opened in the red as investors turned defensive heading into the weekend.

• KOSPI Composite Index dropped 0.28% to 3,245.44, weighed by semiconductor stocks and light profit-taking in large-cap tech names.
• S&P BSE SENSEX in India fell 0.36% to 81,185.58, marking a pause after a strong July. Investors are cautious ahead of major earnings reports and RBI policy signals next week.

China Sees Broad-Based Losses

Mainland China and Hong Kong equity markets were firmly lower in early trading, as confidence in the post-stimulus recovery continues to fade.

• Shanghai Composite (000001.SS) declined 1.18% to 3,573.21, amid ongoing worries about the property sector and weak factory output.
• Hang Seng Index plunged 1.60% to 24,773.33, with tech giants and developers leading the slide.

Contributing factors to China’s selloff:

• Persistent weakness in real estate and construction activity
• Disappointing PMI data signaling softer manufacturing
• Foreign outflows amid geopolitical and regulatory uncertainty

Currency Moves Amplify Market Trends

Currency markets across Asia contributed to the equity moves:

• The Japanese Yen’s sharp decline supported exporter-heavy equities in Tokyo
• The Australian Dollar drifted lower amid mixed economic indicators
• Weakness in the Chinese Yuan continues to raise concerns about capital flight and trade competitiveness

Looking Ahead

Friday’s mixed open reflects the complexity of market drivers across Asia—ranging from corporate earnings strength in Japan to structural and policy challenges in China.

Key themes to watch going into next week:

• Corporate earnings from major Indian and Korean firms
• China’s potential for further economic stimulus
• Central bank signals from the Reserve Bank of India and the Bank of Japan
• U.S. nonfarm payrolls later today, which may impact global risk appetite and currency flows