Asia-Pacific markets mixed; oil holds near highs, gold flat

Session recap:

• Oil stayed supported following Monday's advance, as President Trump pledged a strong response to Iran's retaliation and a Saudi VLCC reportedly stopped after being hit by projectiles in the Strait of Hormuz.
• Dan Driscoll has stepped down as US Army Secretary following months of friction with Defense Secretary Pete Hegseth, the Wall Street Journal reported.
• Gold traded nearly flat under USD 4,450 an ounce after a subdued session and with yields recently rising.
• China's RatingDog Manufacturing PMI climbed to 51.5 in August, its highest in two months, from 50.9 in July, as new orders and exports picked up. This marked the ninth consecutive month of growth and was taken as a favourable indicator for the Australian dollar due to its proxy relationship with China.
• Japan's S&P Global Manufacturing PMI increased to 54.9 in August from 54.5 in July, marking eight consecutive months of improvement. New orders expanded at their quickest rate in more than eight and a half years, driven by demand for AI and semiconductors, but the reading fell short of the 55.1 forecast.
• South Korea's S&P Global Manufacturing PMI slipped to 52.3 in August from 53.1 previously.
• Net exports added 0.1 percentage points to Australia's Q2 GDP, after earlier data indicated underlying government demand and inventories contributed 0.33 percentage points.
• Treasury Secretary Bessent stated his belief that Japan will move to bolster the yen and that markets are factoring in a BOJ rate increase, following his meetings with BOJ Governor Ueda and Finance Minister Katayama at the G20. USDJPY was around 159.75, near the 160 mark that has historically signalled intervention risk.
• Katayama separately affirmed to Bessent that orderly yen and foreign exchange rates are vital for global financial stability and that joint intervention remains important. She refrained from commenting on the current yen level.
• The greenback was marginally firmer against most major currencies.
• A fresh report revealed the extent of state support for China's equity markets: SASAC and Chengtong increased their A-share holdings by over 60 billion yuan in 2026, within a broader buyback initiative encompassing 1,051 listed companies with planned buybacks totalling more than 220 billion yuan, as per the China Association for Public Companies.
• Japan's Nikkei 225 recovered from earlier lows and edged into positive territory briefly, despite headwinds from rising yields. The KOSPI slipped fractionally on sparse news and mixed moves among tech stocks. In China, the Hang Seng dropped roughly 1% and the Shanghai Composite gained 0.2%, with mainland equities buoyed by the better-than-anticipated Chinese manufacturing PMI.

Middle East headlines were scarce during the session, but oil stayed supported following Monday's rally. That rally came after a US strike on Iranian rocket launchers and Iran's subsequent retaliation. President Trump has promised a forceful response to that retaliation. Additional support came from reports that a Saudi VLCC had been stopped after being hit by projectiles in the Strait of Hormuz, continuing a series of tanker incidents in the waterway.

In a separate development, Dan Driscoll resigned as US Army Secretary after months of conflict with Defense Secretary Pete Hegseth, per the Wall Street Journal.

Gold held nearly unchanged under USD 4,450 an ounce, after a calm prior session and with bond yields having risen recently.

Economic data releases were more numerous, led by China's private manufacturing survey. The RatingDog China General Manufacturing PMI rose to 51.5 in August, a two-month high, from 50.9 in July, with new orders and exports both accelerating. This was the ninth straight month of expansion and was viewed as a favourable indicator for the Australian dollar because of its close correlation with China.

In Japan, the S&P Global Manufacturing PMI increased to 54.9 in August from 54.5 in July, marking the eighth successive month of gains. New orders grew at the quickest rate in over eight and a half years, buoyed by robust AI and semiconductor demand, but the number missed the 55.1 estimate. South Korea's comparable survey dipped to 52.3 in August from 53.1 previously.

For Australia, net exports added 0.1 percentage points to Q2 GDP, after data from the previous day showed underlying government demand and inventories contributed an extra 0.33 percentage points to growth in the same quarter.

On currencies, Treasury Secretary Scott Bessent expressed his belief that Japan will take steps to strengthen the yen and that the market has priced in a BOJ rate increase. This followed his meetings with BOJ Governor Kazuo Ueda and Finance Minister Satsuki Katayama at the G20 in Asheville. USDJPY traded near 159.75, approaching the 160 threshold that has historically indicated increased intervention risk. Katayama separately confirmed to Bessent that orderly yen and broader exchange rates are vital for global financial stability and that both sides acknowledge the importance of joint intervention, though she would not comment on whether current yen levels are appropriate. The US dollar was slightly higher versus most major currencies throughout the session.

A fresh report underscored the magnitude of state-backed support entering Chinese equities: the State-owned Assets Supervision and Administration Commission and China Chengtong Holdings Group increased their combined A-share holdings by over 60 billion yuan in 2026 to date. That amount is part of a wider buyback effort involving 1,051 listed companies, with planned buybacks topping 220 billion yuan, as per a report from the China Association for Public Companies.

Regional stock markets were mixed. The Nikkei 225 recovered from its earlier lows and briefly moved into positive territory, even with headwinds from rising yields. The KOSPI edged lower amid sparse news and indecisive action among its tech leaders. In Hong Kong and mainland China, the Hang Seng slid roughly 1% and the Shanghai Composite gained 0.2%, with mainland shares supported by the better-than-expected Chinese manufacturing PMI from earlier.