Asia mid-session: Asia Pacific stocks dip on China PMI, Aussie dollar underperforms

[Redator]

US equities delivered another strong session, with the S&P 500 rising 0.5% to close at a fresh record of 6,227. Small‑caps led the charge, as the Russell 2000 jumped 1.31%, clearing its 200-day moving average for a second straight day, evidence that the post “Liberation Day” rebound has broadened beyond mega‑cap tech.

Asia Pacific stock markets falter on slowing China Services PMI and trade tensions

In contrast, Asian shares weakened intraday. Hong Kong’s Hang Seng Index fell 1%, while the Hang Seng China Enterprises Index plunged 1.4% after China’s Caixin Services PMI dropped to a nine-month low of 50.6 (May: 51.1; consensus: 51.0).

Meanwhile, President Trump’s announcement of a US‑Vietnam trade deal, including a 40% levy on goods transshipped via Vietnam—threatens to draw China into a new round of tit‑for‑tat tariffs, potentially weighing further on regional equities.

GBP under pressure on UK fiscal uncertainty

The pound was the worst-performing major currency on Wednesday, sliding 0.8% against the dollar amid concerns over UK public finances. Prime Minister Starmer’s refusal to confirm Chancellor Reeves’s future role raised fears that a successor might abandon the government’s fiscal rules, widening the deficit. In today’s Asia session, GBP/USD extended losses to 1.3628.

Aussie dollar underperforms

In today’s Asia session, the worst performer has been the high beta Aussie dollar, where it shed -0.3% against the US dollar due to the weak China Caixin Service PMI print and the risk of China’s retaliation measures towards the US over the 40% levy on transhipped Vietnamese goods in the US-Vietnam trade deal.

Read more in our previous Chart of the day – Potential bullish breakout in AUD/US

Gold consolidates ahead of key US Data

Gold (XAU/USD) remains range-bound between its 20‑ and 50‑day moving averages (US$3,360–3,318) as markets await today’s US non-farm payrolls and ISM Services PMI releases.

Economic data releases

Fig 1: Key data for today’s Asia mid-session (Source: MarketPulse)

Chart of the day – AUD/USD at risk of minor setback before new bullish leg

Fig 2: AUD/USD minor trend as of 3 July 2025 (Source: TradingView)

The recent 3.4% rally seen on the AUD/USD from the 23 June 2025 swing low of 0.6373 is coming close to an inflection level of 0.6600, where it faces the risk of a minor corrective setback before a new bullish up move sequence materialises.

In addition, the hourly RSI momentum oscillator remains capped by a parallel descending resistance at around the 63 level since Wednesday, 2 July, US session, which suggests a lack of bullish momentum.

Watch the 0.6600 key short-term pivotal resistance on the AUD/USD with the next intermediate supports coming in at 0.6530 and 0.6510 (also the 20-day moving average and the pull-back of the former 8-week range resistance) (see Fig 2).

On the other hand, a clearance above 0.6600 invalidates the corrective setback scenario for the continuation of the bullish impulsive movement to expose the intermediate resistances at 0.6630/6645 and 0.6690.

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