Asia Market Quick Take – August 29, 2025

Asia Market Quick Take – August 29, 2025 

Key points:  

• Macro: US GDP grows 3.3% yoy; Tokyo’s core CPI rises 2.5% yoy 
• Equities: S&P 500 closes at new high of 6501; Snowflake surges 20% 
• FX: USD weakens on softer yields; GDP up, jobless claims fall; eyes on PCE 
• Commodities: Gold rallies to highest since 23 July 
• Fixed income: Treasuries twist‑flattened as the long end outperformed 

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• Japan's retail sales rose 0.3% year-on-year in July 2025, markedly slower than June's revised 1.9% and below the expected 1.8% rise. It was the slowest growth since February 2022 yet marked the 40th consecutive increase.
• Tokyo's core consumer prices rose 2.5% year-on-year in August 2025, above the BOJ’s 2% target. Governor Ueda expects wage increases amid a tight labor market, hinting at possible rate hikes. The BOJ paused hikes in July due to U.S. tariff concerns but raised its inflation outlook.
• Japan's industrial production dropped 1.6% in July 2025, reversing June's 2.1% rise and exceeding the expected 1.0% decline. It was the steepest fall since November 2024, impacted by U.S. trade uncertainty, weak demand, and pressure on autos and steel industries.
• Japan's unemployment rate fell to 2.3% in July 2025, below the expected 2.5% and the lowest since December 2019. Unemployment dropped by 80 thousand to 1.64 million. Employment decreased by 10 thousand to 68.31 million, and the labor force shrank by 110 thousand to 69.93 million.
• The U.S. economy grew at an annual rate of 3.3% in Q2 2025, rebounding from a 0.5% contraction in Q1. Revised figures showed higher investment (5.7%) and consumer spending (1.6%), offset by lower government spending (-0.2%) and revised imports (-29.8%).
• U.S. pending home sales decreased by 0.4% in July 2025, following a 0.8% drop in June, marking the first consecutive decline since January. Sales fell in the Northeast (-0.6%), Midwest (-4.0%), and South (-0.1%), compensating for a 3.7% rise in the West.
• U.S. initial jobless claims dropped by 5,000 to 229,000 in the week ending August 23, slightly below expectations. Continuing claims fell by 7,000 to 1,954,000. While not signaling rapid labor market deterioration, concerns about hiring slowdown persist. 

Equities:  

• US - U.S. stocks closed higher Thursday, with the S&P 500 hitting a record above 6,500, the Nasdaq 100 up 0.6%, and the Dow adding 72 points. Gains were fueled by strong economic data and AI optimism despite mixed Nvidia results. The chipmaker posted 56% revenue growth but excluded China sales from guidance, leaving shares slightly lower even as analysts stayed bullish. Tech leaders like Broadcom, Micron, Microsoft, Meta, and Amazon advanced. GDP was revised up to 3.3% in Q2, and jobless claims fell, easing recession fears. On earnings, CrowdStrike rose 4.6%, HP 1.9%, and Snowflake surged 20.2%. 
• EU - European stocks ended mixed Thursday as investors weighed U.S. tech earnings and global rate outlooks. The STOXX 50 edged up to 5,393, while the STOXX 600 slipped 0.2% to 554. Nvidia beat estimates but warned of slowing demand, fueling doubts about the AI-driven rally. Chip-related stocks were mixed: ASML fell 1%, Infineon rose 1.1%. Pernod Ricard gained 1.4% on strong Q2 results, while autos advanced despite weak registration data, with BYD leading gains. 
• HK - Hang Seng fell 0.8% to 24,999 on Thursday, its third straight decline, pressured by consumer and tech losses. The index hit a one-week low amid doubts over China’s rally and caution ahead of August PMI data. Meituan plunged 13.2% on rising food delivery competition, while Alibaba slid 4.7% as it refinanced a $6.5B loan. In contrast, local chipmakers rallied on Nvidia-related trade concerns: SMIC jumped 10.5%, Horizon Robotics 13.7%, and Lenovo 2.5%. Losses were limited by a rebound in U.S. futures on Fed rate-cut hopes after Powell’s dovish tone and Trump’s pressure on the central bank. 

Earnings this week: 

• Friday: Alibaba, Bank of China, BYD, China Shenhua Energy, China Yangtze Power, Ackermans, CPI Property Group, BRP, Frontline, KBC Ancora 

FX: 

• USD was broadly sold amid softer US yields, despite an upward revision in Q2 GDP growth to 3.3% and falling jobless claims. Core PCE prices were revised down, and the Dollar remained steady ahead of Fed Governor Cook's hearing on Friday, which could impact her voting status. Core PCE is expected to rise 0.3% M/M on Friday, potentially moving the Dollar.
• G10 currencies gained, led by SEK, AUD, NZD, EUR, and JPY, with no single headline driving the moves. EUR saw EZ sentiment below forecasts and ECB minutes as a non-event, with unchanged rates and discussions on supportive interest rates. The EU proposed tariff reductions for the EU-US deal, with EURUSD trading around 1.6790. 
• USDJPY was unaffected by BoJ's Nakagawa's comments, focusing on data-driven policy decisions. Japan's trade negotiator Akawzawa cancelled a US visit, with USDJPY at 146.90 from earlier highs.  
• GBP saw modest gains, trading around 1.35, influenced by UK political developments such as a planned cabinet reshuffle and potential tax hikes on landlords, as the government prepares for the Autumn Budget. 
  
  Economic Calendar - Japan Consumer Confidence, Japan Housing Starts, Germany Retail Sales, France Inflation Rate, Germany Unemployment Rate, Germany Inflation Rate, Canada GDP, US PCE Price Index, US Personal Income, US Personal Spending 

Commodities: 

• Oil rose as peace prospects between Russia and Ukraine faded, reducing chances of more Russian supply. WTI gained 0.7% to above $64, reversing losses, after Germany’s Chancellor Merz said a Zelenskiy–Putin meeting “won’t happen.” 
• Gold rose 0.6% to $3,416.85 as traders await US PCE — the Fed’s preferred gauge — expected to quicken and curb rate‑cut hopes, amid Fed‑independence concerns and an upward GDP revision. Silver, platinum and palladium also gained. 

Fixed income:  

• Treasuries twist‑flattened, with the long end outperforming ahead of month‑end and after front/belly supply. Early‑week steepeners were unwound, while an upside GDP revision cheapened the front end. The 10 year yield ended near 4.21% (−2bp), with gilts outperforming by ~1bp. After the 7‑year auction, long‑end gains extended, further flattening 2s10s and 5s30s. 

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