Asia markets mixed as China manufacturing contracts again, Japan business confidence at 2-year high

Asia-Pacific markets started the second half of the year mixed as investors assessed official June business activity data from China and Japan’s business confidence readings.

China released its official PMI figures on the weekend, with its manufacturing PMI coming in at 49.5, unchanged from May and marking its second straight month in contraction territory.

Confidence among big Japanese manufacturers improved in the second quarter to a two-month high, with the Tankan survey at +13 compared to +11 in the first quarter. Economists polled by Reuters expected a +12 reading.

Non-manufacturers’ sentiment stood at +33, matching market forecasts and down from +34 in the previous quarter. This was also the first time in four years that confidence among non-manufactures worsened.

Separately, S&P Global purchasing managers’ index readings will be out for several Asian economies, including China, Japan and South Korea.

Japan’s Nikkei 225 rose 0.8% while the the broad-based Topix was 0.94% higher. At current levels, the Nikkei has reached its highest since April 1.

South Korea’s Kospi was 0.16% down, but the small cap Kosdaq advanced 0.55%.

Australia’s S&P/ASX 200 fell 0.65%.

Hong Kong markets will be closed Monday for a public holiday.

Overnight in the U.S., all three major indexes ticked down as traders looked at a “near perfect” set of inflation data, according to an industry expert.

Inflation in May slowed to its lowest annual rate in more than three years, with the core personal consumption expenditures price index, up just 0.1% last month and 2.6% higher from the prior year and in line with Dow Jones estimates.

The core PCE index, which strips out prices of food and energy, is the Federal Reserve’s preferred inflation measure. Headline PCE, which includes food and energy, was flat on the month and up 2.6% on an annual basis — also in line with expectations.

“From the market’s perspective, today’s PCE report was near perfect,” said David Donabedian, chief investment officer of CIBC Private Wealth U.S. “This was unambiguously a positive report.”

The S&P 500 slid 0.41%, while the Nasdaq Composite declined 0.71%. The two averages hit new all-time intraday highs earlier in the session before pulling back. The Dow Jones Industrial Average dropped 0.12%.

—CNBC’s Hakyung Kim and Alex Harring contributed to this report.