Asia stocks suffer tech jitters, China plays its own game

Highlights:

• Nikkei slips, China holds recent hefty gains
• Gold rises as dollar slips, oil gives ground
• Raft of US data to test market wagers on Fed rate cuts
• Trump tariff policy in doubt after court ruling

Asian shares were mostly downbeat on Monday as profit-taking hit some high-flying Japanese tech groups, though China remained well supported by optimism over its home-grown AI ventures.

A holiday in the US made for thin trading, with Wall Street and European share futures managing minor gains after retreating on Friday.

The dollar and bonds were under some pressure ahead of a busy week for US data which includes surveys of manufacturing and services, and a range of labour numbers culminating in the August payrolls report on Friday.

Median forecasts are for an increase of 75,000, though estimates range widely from zero to +110,000 due to the uncertainty caused by July's surprisingly weak report, while the jobless rate is seen ticking up to 4.3%.

Analysts also cautioned the August report has shown a bias to undershoot forecasts over the past decade. A result in line or softer would cement market expectations for the Federal Reserve to cut rates at its meeting on September 17, which futures imply is a near 90% probability.

"Although inflation and growth data don't scream out for a rate cut, at this stage it would likely require a significant positive employment surprise to stop the Fed from moving forward, given their concern about the sharp recent deceleration in job growth," said Michael Feroli, chief US economist at JPMorgan.

The prospect of lower borrowing costs has underpinned Wall Street near record highs, and would be timely given September has been the worst performing month of the year for the S&P 500 over the past 35 years.

S&P 500 futures and Nasdaq futures both dipped 0.1%. EUROSTOXX 50 futures firmed 0.1%, while FTSE futures were flat and DAX futures gained 0.1%.

Japan's Nikkei fell 1.6%, led by a 9% slide in chip group Advantest which finally ran into selling after climbing 49% in the past three months. South Korea's market slipped 0.7%.

Indonesian markets lost 1.5% after protests shook the government and forced the central bank to defend the rupiah.

CHINA BULLS

MSCI's broadest index of Asia-Pacific shares outside Japan added another 0.4%, after hitting a four-year high last week on the back of a bull run in Chinese stocks.

Chinese blue chips also gained 0.4%, having surged 10% over August as abundant liquidity sought capital returns in an otherwise low-yield environment.

The RatingDog China General Manufacturing PMI, compiled by S&P Global, rose to 50.5 in August, up from 49.5 in July and outpacing the official survey.

Hong Kong shares of Alibaba jumped almost 19% in the biggest one-day rise since early 2022 on optimism over its cloud business. There were also reports that DeepSeek had opted for Huawei chips to train some of its AI models.

US tariff policy remained a concern after a Court of Appeals ruled many of President Donald Trump's sweeping levies were illegal, but left them in place until mid-October awaiting an appeal to the Supreme Court.

The White House has other means to apply sectoral levies but it puts a question mark over trade agreements already reached or being negotiated. Talks with Japan have hit a stumbling block over rice, while negotiations with South Korea have become bogged down.

"If the Supreme Court upholds the ruling, the Treasury would still need to return most of the now close to $100 billion in additional customs duties collected over the past five months, and there is a danger that other countries would backtrack on any preliminary agreements," noted Paul Ashworth, chief North America economist at Capital Economics.

Investors will also be wary of Trump's attacks on the independence of the Fed this week, with Fed Governor Lisa Cook set to file fresh arguments against her firing on Tuesday.

A confirmation hearing for Stephen Miran, Trump's pick for another Fed position, is scheduled for Thursday.

The political pressure for faster rate cuts has been a drag on the US dollar, which was pinned at 97.791 having shed 2.2% last month. The euro edged up 0.3% to $1.1710 , while the dollar held at 146.93 yen .

In commodity markets, gold has benefited from the dollar's decline and the outlook for lower rates to rise 2.2% last week. The metal added another 1.0% to a four-month top of $3,481 an ounce .

Oil prices were on the defensive ahead of a planned increase in output from OPEC+ in coming months.