Japan's trade balance remained in deficit for the second consecutive month, raising the risk of a recession. Core machinery orders and the Tankan survey showed a weakening outlook for the manufacturing sector.
Rapidly escalating Middle East tensions raised the prospects of crude oil and natural gas supply chain disruptions, as the U.S. mulled joining Israel's war on Iran.
The Bank of Japan held its short-term interest rates steady, citing rising geopolitical uncertainty and lingering uncertainty rooted in the U.S. trade policy.
The Bank of Japan is widely expected to hold rates at the end of a two-day meeting on Tuesday. Shipping companies were in focus after Iran threatened to block the Strait of Hormuz.
China's strong but mixed batch of economic data in May failed to improve market sentiment. Retail sales soared above 6%, supported by the government's trade-in program.
Japan's benchmark indexes declined about 1% amid rising tensions in the Middle East. Crude oil prices surged more than 5%, and Japan's bond yield edged lower.
Friday's decline turned weekly gains to losses in China and Hong Kong, and crude oil and gold prices advanced. Chow Tai Fook confirmed ongoing sales weakness in China.
Business sentiment at large manufacturing companies deteriorated to the lowest level since the first quarter in 2024 amid constantly changing U.S. trade policy.
The threat of new U.S. tariffs renders the recently announced trade framework worthless, after Donald Trump signaled his intentions of unilateral tariffs.
U.S.-China trade negotiators signaled a framework agreement that could lead to higher tariff levels by the end of the first week in August. However, the vague nature of an agreement raised the prospect of prolonged trade tensions.
Three new companies listed their shares on the Hong Kong Stock Exchange and raised a total of HK $630 million. Residential property developers advanced as Chinese authorities looked to provide an alternative to mortgages issued by banks.
Japan's GDP growth was revised to flat from a contraction of 0.2% in the preliminary estimate because of a slight upward revision in private consumption.
Weak consumer demand and the protracted property market slump extended consumer price deflation for the fourth month in May. China's trade surplus widened, as exports rose at a faster pace than imports despite simmering tensions with the U.S.
