Asia Market Quick Take – August 26, 2025

Key points:

• Macro: Trump fires Fed Governor Lisa Cook
• Equities: Shanghai Composite rises to 10-year high of 3,884
• FX: USD rebounds; DXY 98.20; EUR falls; Nvidia, PCE, GDP loom ahead
• Commodities: Oil extends gains to four days touching $65
• Fixed income: Three- and six-month Treasury bills drew strong demand

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Trump announced via social media that he's firing Federal Reserve Governor Lisa Cook, escalating his conflict with the Fed over interest rate policies. Cook has also faced accusations from Trump and his administration of mortgage fraud.
• U.S. new single-family home sales fell 0.6% in July 2025 to an annual rate of 652,000 units, surpassing expectations of 630,000 but down from June's revised 4.1% increase.
• The Dallas Fed's Texas manufacturing activity index decreased to -1.8 in August 2025 from 0.9 in July, signaling mild contraction. The production index dropped to 15.3 from 21.3, but stayed above average. New orders turned positive at 5.8, the first rise since January. Capacity utilization fell to 13.7 from 17.3. Shipments surged 12 points to 14.2, a three-year high. The employment index remained at 8.8, with 20% of firms hiring and 11% laying off staff.
• The Chicago Fed National Activity Index dipped to -0.19 in July from -0.18 in June, indicating U.S. economic activity was below trend for the fourth month. While only one category worsened, three continued to negatively impact the index.
  Equities: 

• US - US stocks slipped Monday as investors paused after last week’s rally and awaited Nvidia’s earnings on Wednesday. S&P 500 fell 0.3%, Dow dropped 349 points, and Nasdaq 100 lost 0.4%, with consumer staples, health, and utilities leading declines. Nvidia rose 1%, while Intel slid 1% after reports of a 10% U.S. government stake tied to a sovereign wealth fund plan. Traders also eyed Friday’s PCE inflation data, expected at 2.9%, and maintained an 86% chance of a September rate cut after Powell’s dovish remarks.
• EU - European stocks fell Monday, trimming last week’s gains as investors weighed global rate outlook and corporate news. The STOXX 50 dropped 0.8% to 5,444 and STOXX 600 slipped 0.5% to 559 after markets scaled back Fed rate-cut bets despite Powell’s dovish tone. Banks led losses, with BBVA down 2%, BNP Paribas 3.5%, and UniCredit 0.4% after converting its Commerzbank position to shares. JDE Peet’s surged 17.5% on a €15.7B takeover by Keurig Dr Pepper, while Puma jumped 16% on reports of a potential Pinault family bid.
• HK - Hang Seng jumped 1.9% to 25,830 on Monday, its highest since Oct 2021, extending gains for a second session on U.S. rate-cut hopes and China stimulus measures. The PBoC injected a net CNY 465.7B, its largest daily addition since July, while China stocks have surged nearly 10% this month on ample liquidity. Tech led gains, with the Tech Index up 3% ahead of Nvidia earnings and DeepSeek’s new AI model launch. Consumer, property, and financial shares also rose after Shanghai scrapped property taxes for first-home buyers. Top movers: KE Hlds (+5.6%), Galaxy Ent (+5.3%), Lenovo (+3.9%), Meituan (+3.0%), Tencent (+2.4%).
• CH - The Shanghai Composite rose 1.51% to 3,884 and the Shenzhen Component gained 2.26% to 12,441 on Monday, with the former hitting a 10-year high as momentum strengthened. Chinese stocks have rallied this month on easing US-China trade tensions, policy support hopes, and bullish sentiment, following Wall Street’s surge after Powell signaled possible rate cuts. Investors now await PMI and industrial profit data for economic clues. Top movers: Cambricon (+11.4%), China Northern Rare Earth (+9.9%), and Hygon Information (+12.9%).

Earnings this week:

• Tuesday: PetroChina, Ping An Insurance, Zijin Mining, Nongfu Spring, Fortescue, Bank of Montreal, Bank of Nova Scotia, MongoDB, Okta.
• Wednesday: China Life Insurance, Meituan, China Citic Bank, Shanghai Pudong Development Bank, PICC Property & Casualty, Royal Bank of Canada, CrowdStrike, Snowflake, Veeva Systems.
• Thursday: Industrial Bank, Wesfarmers, Citic Securities, China Pacific Insurance Group, Haier Smart Home, Nvidia, TD Bank, Dell Technologies, Canadian Imperial Bank of Commerce, Pernod Ricard.
• Friday: Alibaba, Bank of China, BYD, China Shenhua Energy, China Yangtze Power, Ackermans, CPI Property Group, BRP, Frontline, KBC Ancora.

FX:

• USD gained on Monday, partially reversing Friday’s post-Powell losses amid a quiet start to the week ahead of key events (Nvidia earnings, US PCE, and GDP). US new home sales beat expectations; Fed commentary was scarce. DXY traded above 98.20.
• EUR slipped to 1.1650 as a stronger dollar and scant euro-area catalysts weighed, with mixed German Ifo readings offering little support.
• GBP eased in thin, holiday-muted trade, with liquidity dampened by the UK bank holiday.
• JPY weakened, with USDJPY edging higher as the dollar recovered part of its post-Powell decline.
• AUD and NZD outperformed on stronger CNY fix; focus on RBA minutes and Wednesday CPI (strong print could delay easing; electricity key). AUDUSD 0.6490, NZDUSD 0.5860.
• Economic Calendar - Australia RBA Meeting Minutes, France Consumer Confidence, US Durable Goods Orders, Fed Barkin Speech, US CB Consumer Confidence, BoC Machlem Speech

Commodities:

• Oil steadied after a four-day rise, with the US set to double tariffs on Indian imports due to Russian crude purchases. WTI traded near $65, and Brent just below $69, as broader plans aim to broker Russia-Ukraine peace.
• Gold rose after US President Trump announced the immediate removal of Fed Governor Lisa Cook. Overcoming an earlier decline, bullion was up 0.4% to around $3,380 an ounce in early Asian trading.

Fixed income:

• Treasuries posted small losses, ahead of today’s auction of two-year notes. Rising yields in euro-zone bonds pressured the US market, which saw its second-largest advance of the month on Friday. Demand was strong for three- and six-month Treasury bills as buyers, including money-market funds, extended maturities, anticipating possible Fed rate cuts next month. French bonds led a bear-steepening trend after PM Francois Bayrou announced a confidence vote, widening the 10-year yield spread over Germany to its widest since April.

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