Asia Market Quick Take – 18 August, 2026

Key points:

• Macro: Iran shifts from ‘defensive’ policy to fully ‘offensive’
• Equities: S&P slips on yields and oil, while AI chipmakers rally strongly
• FX: Dollar softens on fading Fed hike bets; CHF outperforms G10; EURCHF nears one-year high
• Commodities: Brent rises settling near $91 and gold rallies towards $4,430
• Fixed income: 30Y Treasury yield at 19-year high; record corporate issuance

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Disclaimer: Past performance does not indicate future performance.

Macro:

• A senior Iranian official told Reuters that Iran is shifting from a defensive to a “fully offensive” stance, giving the US a deadline of a few weeks to implement the MoU. If diplomacy fails, Iran is prepared to escalate tensions in the Strait of Hormuz and the wider region, with the timeline conveyed to Washington and regional states via mediators.
• Canada’s headline inflation rose to 2.9% in July from 2.8% in June, still below the 3.2% post-Iran-war peak. Gasoline inflation climbed to 25.7% on renewed Iran–US tensions. Core inflation inched up (median 2.0%, trimmed 1.9%), with World Cup–driven travel costs surging, while food and shelter inflation eased. Month over month, prices gained 0.5% after a 0.4% decline.
• The NAHB/Wells Fargo Housing Market Index fell to 25 in August 2026 from 34 in July, defying expectations for 33. Current sales conditions rose two points to 39, and sales expectations stayed at 43. Price cuts were reported by 35% of builders (down two points), averaging 6%.
• The Empire State Manufacturing Index rose to 20.6 in August from 15.6, far above expectations and the strongest since late 2021. New orders and shipments increased, delivery times lengthened, and inventories fell amid worsening supply conditions. Employment edged up, input costs rose, and selling prices stayed elevated, while firms remained optimistic despite modest capex plans.
• China’s retail sales rose 0.6% year-on-year in July, down from 1% in June and below the 1.5% forecast. Auto sales slumped 17%, while sales excluding autos grew 2.5%. Petroleum, furniture, and building materials declined, but communication equipment, cosmetics, food, and tobacco/alcohol increased. Month-on-month, sales rose 0.06%. January–July retail sales were up 1.2%, or 2.7% excluding autos.
• Japan’s real GDP grew 1.1% annualized in Q2, missing the 2% forecast and slowing from a revised 1.9% in Q1, as capital spending slumped and private consumption stalled under inflation, complicating yen support efforts.

Equities: 

• US - S&P 500 fell 0.5% to 7,745.06, its biggest drop since July 29, as higher oil prices and surging long-end Treasury yields hurt sentiment. The Dow lost 0.5% and the Nasdaq Composite 0.32%, while the Nasdaq 100 slipped 0.2%. Energy was the only gaining sector; communication services led declines, with all Magnificent Seven stocks down. Microsoft fell 3.0% and Meta 3.8%. Constellation Brands slid 5.7% after Berkshire fully exited its stake, and Stellantis’ US shares dropped nearly 5% on a large recall. Chipmakers outperformed on AI optimism—SanDisk rose 8.9%, Marvell 6.4%, and Micron gained—while Amylyx jumped 12% after hours on positive Phase 3 trial results.
• Europe - European equities ended modestly lower, with the Stoxx 600 down 0.2% to 656.41 and the FTSE 100 off 0.3% to 10,720.30. Chip stocks outperformed (ASML, STMicro, ASMI) on Anthropic’s AI-fueled revenue surge. Argenx jumped up to 18% to a record after Vyvgart met Phase 3 endpoints in two indications. Nestlé was the biggest drag on the Stoxx 600, down 2.8%, while SIG Group slumped 17.6%; Stellantis also fell sharply. The ECB warned in a blog post that an AI-driven stock correction is likely and could have severe euro area repercussions.
• Asia - Asian markets were mixed-to-positive Tuesday. Korea’s Kospi jumped 2.1% at the open, tracking US chip gains on Anthropic’s revenue surge. Japan lagged, with the Topix down 0.2% amid higher oil and JGB yield pressure. In Hong Kong on Monday, the Hang Seng Tech Index rose over 2%, led by Chinese tech. Geely Auto surged on strong Q2 profit and news that founder Li Shufu will step down as chairman to become honorary chairman. Xiaomi, up nearly 20% since end-June on SUV optimism, reports earnings today, with input costs in focus. In Tokyo, Dentsu Soken gained 3.9% after Oasis Management disclosed a 5% stake.

Earnings this week:

• Tuesday - Home Depot, BHP, Xiaomi, Baidu
• Wednesday - Lowe’s, Target, TJX, Estee Lauder, Analog Devices, HKEX, Kuaishou Technology
• Thursday - Walmart, Deere & Co., Ross Stores, Alibaba, Ping An Insurance, Pop Mart
• Friday - BJ’s Wholesale Club

FX:

• USD weakened for a third straight session on Monday, with the Bloomberg Dollar Spot Index touching its lowest level since mid-May before closing down about 0.1%, as softer US data — including weak July retail sales and poorer consumer sentiment — sharply reduced the implied probability of a September Fed hike to roughly one‑in‑three from around 75% at end-July.
• CHF was the best-performing G10 currency in early Asian hours, gaining 0.62% vs. the dollar. EURCHF rose to a near one-year high (~0.9400), though technical analysts flagged a DeMark Sell Setup completing on the daily chart.
• AUDUSD climbed 0.4% to 0.7109 intraday, supported by the softer dollar.
• CAD briefly rallied after Canadian CPI for July came in at 3.0%, before giving back gains.
• USDJPY leaned bearish on the weekly outlook per technical analysis, though daily signals were described as conflicting.
• USDCNH held steady even as China’s FX reserves climbed to a 12‑year high on strong Q2 inflows, highlighting ongoing official smoothing of yuan appreciation.

Commodities:

• WTI rose 2.6% on Monday as Trump rejected extending the US-Iran agreement and fighting resumed in Lebanon. Brent settled near $91 a barrel, reigniting inflation concerns and weighing on equities and bonds. US Energy Secretary Chris Wright said Iran is playing a long game in the conflict, raising right-tail risks for energy markets.
• LME three-month copper rose as much as 1.7% on Monday, with the spot-to-three-month backwardation widening to as much as $545 per ton — the widest since the historic 2021 squeeze — as a surge in US-bound shipments in anticipation of potential import tariffs constrained global physical availability. BHP reported a 9% rise in net profit to $9.83 billion for the year to June, with full-year copper revenue overtaking iron ore for the first time.
• Spot gold steadied near $4,420 an ounce in early Asian trading Tuesday, having added 1.5% over the previous two sessions. The metal has extended its advance over the past month to more than 11% — its biggest 22-session move since early February — supported by a weaker dollar, fading Fed hike bets, and Middle East haven demand. Hedge fund managers boosted net bullish gold bets to a 10-month high, according to positioning data.

Fixed income:

• The US 30-year yield rose 4.8 basis points on Monday to 5.31% — its highest since June 2007 — driven by elevated oil prices, a heavy corporate issuance slate, and fiscal concerns over the national debt. The 10-year yield rose 3.1 basis points to 4.724% and the 1-year yield edged up 0.7 basis points to 3.982%. The 5s30s spread widened to 93.4 basis points from 89.6 basis points, extending the bear-steepening trend. Strategists at Goldman Sachs, Morgan Stanley, and BofA all forecast continued curve steepening.
• Twelve companies sold a combined $9.1 billion of investment-grade bonds on Monday, putting US IG issuance on track for a third consecutive monthly record. AI-related hyperscaler borrowing is a key driver. High-yield markets extended Friday's selloff, with just one deal pricing — Gray Media at $750 million — as risk-off sentiment kept the primary market quiet.
• Monday's $92 billion 3-month bill auction cleared at 3.625% and the $79 billion 6-month auction at 3.78%, both stopping through the when-issued. Today the Treasury sells $95 billion in 6-week bills. Wednesday's $16 billion 20-year bond auction will be the next key test of long-end demand, with investors also watching the late-July FOMC minutes for rate path signals. Thursday brings $8 billion in 30-year TIPS.

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