Asia Market Quick Take – August 15, 2025

Key points:

• Macro: US Core and headline PPI grew 0.9%, surpassing expected 0.2% increase
• Equities: United Healthcare rose 10% as Berkshire Hathaway acquired 5 million shares
• FX: USD strengthened as hot PPI data reduces certainty of September rate cut
• Commodities: Gold is poised for a weekly decline
• Fixed income: Treasuries sold off across the curve

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Core and headline PPI rose 0.9% month-over-month compared to the anticipated 0.2%. Over three-quarters of this increase in producer prices was linked to the index for final demand services (+1.1%), with more than half attributable to margins for final demand trade services, which increased by 2%.
• Japan's GDP grew by 0.3% QoQ in Q2 2025, exceeding expectations of 0.1%, due to robust private consumption and strong business investment. Despite high costs, consumption rose by 0.2%, while business investment surged 1.3%. Net trade was a positive contributor, with exports rising 2.0% and imports slowing to 0.6%.
• Russian President Vladimir Putin commended the US for its "energetic and sincere efforts" to halt the conflict in Ukraine. He also showed openness to initiating a new arms control treaty, suggesting such a pact could "establish long-term peace" between the US and Russia. Meanwhile, US President Donald Trump characterized the forthcoming summit as an exploratory meeting, predicting "a 25% chance" it might "not succeed."

Equities: 

• US - US stocks were mixed on Thursday after hotter-than-expected wholesale inflation data dampened hopes for a sizeable Federal Reserve rate cut in September. S&P 500 saw slight gains, rising for the third consecutive day, while the Dow and Nasdaq remained flat. Materials led sector losses, and consumer discretionary stocks struggled to hold earlier gains. Intel surged 7.4% amid talks of a potential US government stake in the company reported by Bloomberg; Cisco fell 1.4% due to a cautious outlook despite AI sales growth; Deere & Co. dropped 6.8% following reduced full-year earnings forecast amid weakening farm spending. United Healthcare also gained 10% in the post market after regulatory filings showed Berkshire Hathaway had acquired 5 million shares in the company. Applied materials fell 14% in after hours as they forecasted a challenging quarter ahead.
• EU – DAX rose 0.8% to close at 24,377.5 on Thursday, the highest since July 10, driven by favorable trade news and optimism for the Trump-Putin summit addressing Ukraine's conflict resolution. The European Commission received a revised US text on tariffs. Leading gainers included Rheinmetall (+2.8%), Airbus (+2.3%), Allianz (+2.1%), Vonovia (+2.1%), and MTU Aero Engines (+2.1%). Commerzbank and Deutsche Bank also rose by 1.8% and 1.6%, respectively, while Thyssenkrupp dropped 8.6% after lowering full-year investment and sales forecasts; RWE fell 2.5% due to disappointing first-half results
• HK - Hang Seng Index fell 0.4%, to 25,519, snapping a three-day winning streak as early gains reversed.New yuan loans saw their first monthly drop since 2005, as banks eased lending in July. Most sectors declined, especially tech, consumer, and financials. Road King Infrastructure dropped 7.6% after suspending offshore debt payments, while KWG Group Holdings plunged nearly 25% due to a winding-up petition. Major losers included Lenovo Group (-6.1%), BYD Electronic (-4.9%), Bank of China Hong Kong (-3.0%), and Power Asset Holdings (-2.7%). JD.com's Q2 profit fell by 51% to 6.18 billion yuan as it battles Meituan and Alibaba in the food delivery sector. Despite increased revenue of 356.66 billion yuan, aggressive promotions continue to pressure profits, with ADR down 1.8%.
• SG - Straits Times Index declined 0.4% to 4,256.52 amid subdued market sentiment. Jardine Matheson Holdings led gains, rising 2% to US$58.51, while ST Engineering fell 6.3% to S$8.40, despite reporting a 19.7% increase in first-half net profit.

Earnings this week:

• Friday: Flowers Foods (FLO), Sands China (1928HK)

FX:

• USD rose following a stronger-than-expected PPI report, reducing Fed rate cut odds slightly to about 96%. Fed members Daly and Musalem cautioned against a 50 bps cut, amid stable labor market data and the DXY index climbing to 98.28.
• Japan's Q2 2025 GDP grew 0.3%, exceeding forecasts, due to strong consumption and business investment. Positive net trade boosted exports by 2.0% as JPY strengthened to 147.60 against USD.
• In G10 FX, USD strength pressured currencies, notably impacting the Antipodes despite solid AUD employment data.
• EUR weakened as the dollar strengthened, with mixed EU data, including in-line GDP figures, offering little support. Meanwhile, the GBP pulled back from resistance levels near 1.36, despite stronger-than-expected UK GDP data.
• Economic Calendar – UK Retail Sales, France Business Confidence, Canada Retail Sales, Jackson Hole Symposium

Commodities:

• Oil stayed stable as investors focused on the US-Russia summit on Friday. WTI was near $64 after a 2.1% rise, balancing earlier losses, while Brent traded above $66. Putin increased diplomacy, as Trump lowered breakthrough expectations.
• Gold is set for a weekly drop as traders cut bets on a Fed rate cut next month amid rising inflation. Spot gold remained at $3,336.45 an ounce, projecting a 1.8% weekly loss. Swap traders see a 90% chance of a September rate cut.

Fixed income:

• Treasury futures fell after sharper-than-expected rises in July PPI and steady weekly jobless claims. Fed rate cut expectations dropped, though demand remained for a SOFR options hedge on a half-point September cut. The 10-year yield near 4.29% was about 2bp and 1bp behind bunds and gilts, respectively. Australia will auction A$1 billion in November 2029 notes, while Japan's Ministry of Finance plans to auction ¥250 billion in March 2035 inflation-linked notes.

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