Key Takeaways
- China’s services sector growth slowed significantly in July, with the RatingDog Services PMI falling to 50.4 from June's 54.1, missing market expectations of 53.7.
- US Treasury Secretary Scott Bessent signaled that a deal with Iran to reopen the Strait of Hormuz could be reached "today or tomorrow," leading to a sharp decline in crude oil prices.
- Toyota (7203) is set to resume production at three Fukuoka plants following disruptions caused by a 7.1-magnitude earthquake in southern Japan.
- Takeda Pharmaceutical (TAK) is seeking to include its Qdenga (TAK-003) dengue vaccine in India’s national immunization program after receiving landmark regulatory approval.
- Gold prices rose to approximately $4,080/oz as investors balanced geopolitical uncertainty in the Middle East against shifting expectations for Federal Reserve interest rate hikes.
China’s Economic Momentum Cools
China’s private-sector activity showed signs of a sharp moderation in July. The RatingDog China General Services PMI plummeted to 50.4, its lowest level since late 2024, as domestic demand weakened and business sentiment softened to levels not seen since the early pandemic. The Composite PMI, which includes manufacturing, also slipped to 50.8 from 53.6, indicating that while the economy remains in expansionary territory, the pace of recovery is losing steam.
Despite the headline slowdown, there were pockets of resilience. Services exports grew for the third consecutive month, and firms continued to add staff, albeit at a slower rate. Analysts suggest that the near-term trajectory of the Chinese economy will depend heavily on whether Beijing introduces further stimulus to bolster consumer confidence.
Geopolitical Shifts and Energy Markets
In a major development for global energy security, U.S. Treasury Secretary Scott Bessent told media outlets that a diplomatic breakthrough with Iran is imminent. The proposed deal aims to restore "freedom of movement" in the Strait of Hormuz, a critical portal for one-fifth of the world's oil and liquefied natural gas.
While Tehran has publicly denied direct negotiations with Washington, mediating partners including Qatar and Oman confirmed that active diplomatic coordination is at a "very progressive stage." The prospect of a reopened strait triggered a 4% drop in crude oil prices, easing global inflation fears and providing a boost to U.S. equity markets.
Industrial and Healthcare Developments in Asia
Toyota (7203) announced it will restart operations at its Miyata, Kanda, and Kokura factories in Fukuoka starting with the Thursday midday shift. The plants were idled following a powerful earthquake on July 28 that damaged local infrastructure and disrupted supply chains. The resumption is expected to ease concerns over production losses for popular Lexus models, including the RX and NX SUVs.
In the healthcare sector, Takeda Pharmaceutical (TAK) is moving to scale its presence in India after its Qdenga vaccine became the first dengue shot approved in the country. The company is now aiming for the vaccine's inclusion in India's official shots program to combat a disease that affects millions annually. Takeda has already partnered with Hyderabad-based Biological E to manufacture up to 100 million doses per year by the end of the decade.
Fixed Income and Currency Markets
The Bank of Korea conducted an auction for 2-year Monetary Stabilisation Bonds, with the average yield set at 3.605%. This comes as South Korean bond yields have eased slightly over the past month, reflecting broader regional trends. Meanwhile, in currency markets, the Chinese yuan showed slight strength at the open, trading at 6.7483 per USD as markets digested the latest PMI data and the potential for de-escalation in the Middle East.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.