Asia Market Quick Take – 22 July, 2026

Key points:

• Macro: US–Iran conflict intensifies; Trump announces 100–200% tariffs on generic drugs
• Equities: 3M jumps on beat-and-raise guidance; TSMC ADRs rise on 2027 price hikes
• FX: USD extends gains; USDJPY tops 163.24, NZDUSD slips to about 0.5826
• Commodities: 10-year yield hit 4.63%, a two-month high
• Fixed income: WTI nears $85 on 4th straight gain; copper near mid-June highs

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Disclaimer: Past performance does not indicate future performance.

Macro:

• US-Iran war escalates: The US and Iran exchanged strikes for a 11th consecutive day, with Trump playing down the prospect of near-term talks and vowing to respond if Houthi militants disrupt Red Sea shipping. Mediators are reportedly proposing a 10-day ceasefire. The conflict has cost the US approximately $37.5 billion to date, per Defense Secretary Hegseth.
• Tariff escalation: Trump announced a 100% tariff on generic drugs imported to the US beginning August 2028, rising to 200% in August 2029, with a two-year tariff-free window starting August 2026. Separately, Trump threatened new 50% tariffs on Canadian goods, prompting Canada to cancel the joint opening ceremony for the Gordie Howe International Bridge.
• Taiwan tariff deadline: The US-imposed 10% universal tariff is due to expire on July 24. Taiwan's trade office is reportedly in close communication with Washington to secure a favorable final rate.
• Japan recorded a JPY 406.9 billion trade deficit in June 2026, versus a JPY 122.3 billion surplus a year earlier and a forecast JPY 120 billion shortfall. Imports jumped 25.4% to a record JPY 11.34 trillion on strong domestic demand and stimulus, while exports rose 19.3% to JPY 10.93 trillion, supported by robust global semiconductor demand.
• Investors assessed the UK’s shifting politics after new PM Andy Burnham unexpectedly named former Defence Secretary John Healey as chancellor, lifting expectations for higher defence spending. Both pledged fiscal discipline as Burnham appeared to retreat from raising the personal income tax allowance. ONS data showed June public sector borrowing at £16 billion, about one-third lower than a year earlier and below forecasts.
• Germany’s ZEW economic sentiment index climbed to 26.3 in July 2026, its highest since February, beating expectations. The rise reflects improved prospects for export-oriented industries and solid domestic demand, supported by reforms, though Iran tensions and high oil prices remain risks. Most sectors improved, especially mechanical engineering, private consumption, and construction, while chemicals, pharmaceuticals, metals, and autos remained weak.

Equities: 

• US: Wall Street snapped a three-day losing streak on Tuesday, led by a sharp rebound in semiconductors. The S&P 500 rose 0.9% to 7,509.20, the Nasdaq 100 gained 1.9% — its best session since June 29 — and the Dow added 0.7% to 52,224.64. The Philadelphia Semiconductor Index surged 5.2%. Micron jumped 12.2% and Sandisk rose 14.3%. Intel climbed on plans to cut further jobs. GM rose 4.9% after beating Q2 EPS and raised full-year EBIT guidance on strong truck margins and lower tariffs. 3M jumped over 9% after a beat-and-raise quarter, boosting full-year EPS and organic growth outlook under CEO Bill Brown’s turnaround plan.In after-hours, Super Micro surged over 17% after guiding gross margins to 15–17%, nearly double prior guidance. Novo Nordisk sued Eli Lilly in U.S. court, alleging false advertising and unfair competition over claims that Zepbound and Mounjaro outperform Novo’s weight-loss drugs.
• EU: European equities rebounded on Tuesday after two consecutive down sessions. The Stoxx 600 rose 0.6%, the Euro Stoxx 50 gained 0.94% to 6,285.63, the DAX climbed 0.7% to 25,011.35, and the FTSE 100 added 0.6% to 10,585.91. Tech led gains, with a UBS basket of European semiconductor stocks jumping 6.0%, snapping a four-day losing streak. ASML rose 4.8% and Infineon gained 5.5%. Novartis climbed after a first-half earnings beat. Swatch and Wienerberger fell sharply on disappointing updates. Mitie Group surged 39.1% to a record high. Antofagasta rose 5.8% on copper strength.
• Asia: Asian markets opened strongly on Wednesday, tracking the Wall Street tech rebound. The Kospi surged approximately 5% at the open to 7,052–7,086, led by chip stocks tracking US gains. Equity futures for Japan and Australia also pointed higher. On Tuesday, the MSCI Asia Pacific benchmark posted its biggest single-day gain in a month. In Hong Kong, Lee & Man Paper surged as much as 14% after reporting 1H profit growth of 64–71% year-on-year; peer Nine Dragons gained 9%. Hutchison Port reported 1H net income of HK$490.5 million, up 85% year-on-year. China's quant hedge fund sector came under scrutiny after reports of a "free fall" spooking wealthy investors. The Nasdaq Golden Dragon China Index fell 0.7% on Tuesday, while TSMC ADRs gained over 5% on raising chipmaking prices by up to 10% from 2027.

Earnings this week:

• Wednesday: IBM, Tesla, Alphabet, GE Vernova, Philip Morris
• Thursday: American Airlines, Blackstone, Intel
• Friday: Verizon, American Express

FX:

• USD extended its advance for a fifth straight session, with the Bloomberg Dollar Spot Index up around 0.2% to a one-week intraday high as rising US Treasury yields and Brent’s move back above $90 on renewed US–Iran tensions stoked inflation concerns.
• USDJPY broke above 163 for the first time since 1986, touching 163.24, driven by higher US yields and Japan’s vulnerability to elevated energy prices; analysts doubted that even potential Ministry of Finance intervention could fundamentally reverse the trend without a sharper BOJ policy shift.
• Across G10, EURUSD slipped to 1.1398, GBPUSD fell to 1.3376 after a choppy session, while AUDUSD briefly traded above 0.70 before finishing essentially flat near 0.6999 as the drag from higher yields and oil offset a rebound in US semiconductor stocks.
• NZDUSD underperformed, closing around 0.5826 and ranking as the weakest G10 currency on the day, with investors increasingly wary that the kiwi is “priced for perfection” given already aggressive RBNZ tightening expectations.
• USDCNH was tightly managed in an extremely narrow range around 6.77, underscoring the PBOC’s firm grip on the daily fix.

Commodities:

• WTI rose toward $85/bbl, its fourth consecutive session of gains and the highest closing level since June 12, as Trump played down Iran talks and Houthi militants threatened Red Sea shipping. Brent settled near $91. The API reported US crude inventories rose 2.6 million barrels last week, though gasoline stockpiles fell 1.4 million barrels. Tropical Storm Bertha in the Gulf of Mexico prompted production shut-ins, sending the Mars crude premium to its strongest level since early June at $2/bbl over WTI.
• Gold held gains around $4,080/oz after rising almost 2% the prior session, as traders monitored threats to energy supply routes that risk stoking inflation and pressuring the Fed toward rate hikes. Trump's dismissal of near-term Iran talks kept safe-haven demand supported.
• Copper headed for its highest close since mid-June on signs of continuing supply tightness in China. European mining stocks outperformed, with Glencore rising 2.6%, Antofagasta gaining 3.7%, and KGHM Polska up 4.5%. The basic resources sub-index in the Stoxx 600 rallied as much as 1.5%, its biggest gain in a week.

Fixed income:

• Treasuries sold off as surging oil prices stoked inflation fears and raised the prospect of Fed rate hikes. The 10-year yield rose to 4.638%, its highest since late May, while the 30-year touched 5.13–5.15%. Yields were 2–5 basis points higher across the curve. A large options trade was noted targeting a further 10bp selloff in the 10-year by July 31, with the strike corresponding to a yield near 4.73%.
• Australian bond futures implied yields rose 3.5–4bps overnight, tracking Treasuries lower as oil extended its rally. Japan's 10-year note futures fell 24 ticks to 127.45 in the night session. The Ministry of Finance is set to auction ¥300 billion of 40-year JGBs (March 2066 maturity) today, with the market expected to absorb supply smoothly, according to SMBC Nikko Securities.

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