Asia Market Quick Take – 31 July, 2026

Asia Market Quick Take – 31 July, 2026 

Key points:  

• Macro: Trump announces Gaza peace deal; US Core PCE below forecasts 
• Equities: US equities soar overnight 
• FX: JPY jumps over 3% on suspected intervention; dollar softens broadly across FX 
• Commodities: Oil on track for 23% monthly gain and copper rallies  
• Fixed income: Yield curve continues to steepen as long end remains high 

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• Trump announced a deal for the full disarmament of Hamas and other armed groups in Gaza, with the territory to be placed under a new Palestinian government, marking a potential breakthrough.
• Markets suspect Tokyo intervened again to support the yen ahead of today’s BOJ decision, after Nikkei reported official FX action and US officials requested dollar–yen quotes. Finance Minister Katayama has signaled readiness to act, as the yen recently hit a 40-year low on high energy costs, fiscal concerns, and wide rate differentials. The BOJ is widely expected to keep rates unchanged after its June hike.
• Japan’s retail sales rose 0.5% y/y in June, down sharply from May’s revised 5.0% and below the 3.1% forecast, the weakest since February and signalling softer consumption. Month-on-month, sales fell 4.1%, the first decline in four months and the biggest since April 2021.
• Tokyo core CPI rose 1.9% y/y in July, up from 1.6% and above the 1.7% forecast, the fastest since January but still below the BoJ’s 2% target. The BoJ’s preferred core measure (ex fresh food and energy) climbed to 2.0%, its highest in four months, reinforcing June’s 25 bp rate hike to the highest level since 1995.
• Real US personal spending rose 0.4% m/m in June, matching May. Goods outlays accelerated to 0.7%, led by vehicles, energy, and clothing, while services rose 0.3%, with stronger recreation and financial services offsetting softer gains in dining, accommodation, and housing. 
• US initial jobless claims rose to 197,000 in the week ending July 25, up 9,000 but still below the 200,000 forecast. Continuing claims fell to 1.782 million, the lowest in over a month, indicating a still-strong labor market.
• US PCE fell 0.1% m/m in June after a 0.5% rise in May, with goods prices down 0.6% and services up 0.1%. Core PCE rose 0.1%, below the 0.2% forecast. Year-on-year, headline PCE slowed to 3.7% and core to 3.3%, both as expected.
• US GDP grew at a 1.5% annualized rate in Q2 2026, down from 2.1% in Q1 and below the 2.1% forecast. Business investment cooled, structures contracted again, and government spending fell, while net trade and inventories dragged on growth. Consumer spending was a bright spot, accelerating to 3.2%.
• BoE kept the Bank Rate at 3.75% in a 6–3 vote, versus expectations of a 7–2 split. It warned that higher energy prices could push inflation up later this year and said upside risks to inflation have increased, while noting that Middle East developments could still materially change the outlook.

Equities:  

• US — The S&P 500 surged 1.7% to 7,437.63 on Thursday, its best day since June 11, snapping a sharp Wednesday selloff. The Nasdaq 100 jumped 3.4% — its best session since March 31 — ending a six-day losing streak. The Dow rose 1.2% to 52,208.06. Microsoft soared 16%, its best day since October 2008, adding a record ~$450 billion in market cap in a single session after its Azure cloud segment grew 43% y/y. The Philadelphia Semiconductor Index surged 9.2%, driven by a recovery in memory chip names (Micron+18.3%, SanDisk +26%). After hours: Amazon jumped ~9% after AWS net sales grew 37% ex-FX, well ahead of the 31.3% estimate. Apple fell ~7% after guiding Q4 revenue growth of 9%–11%, below the 12.1% consensus, citing component supply shortages.
• EU — European equities advanced on Thursday's peak earnings day. The Stoxx 600 rose 0.8% to 649.95, led by miners and banks. ASML gained 5.7% and Infineon surged 9.2% on the DAX (+0.6% to 25,612). The CAC 40 rose 0.9% to 8,485.64. Schneider Electric jumped 11% after raising guidance, while Rolls-Royce gained 6% on a second outlook upgrade. Sanofi was a notable laggard. The FTSE 100 slipped 0.1% to 10,897.27 — pulling back from an intraday record high of 10,979.60 — as AstraZeneca fell 3.2% and Rentokil tumbled 20.6%.
• Asia — Asian equities are surging at the open on Friday, led by a dramatic reversal in Korean tech. The Kospi has opened approximately 14% higher, last seen around 6,354–6,386, with SK Hynix and Samsung Electronics both up more than 25%, rebounding from a brutal three-day selloff that had taken the index roughly 40% off its June peak. The Nikkei 225 is up 5% to 64,938, with the Topix gaining 2%, though Daiichi Sankyo fell 5.8% after a Jefferies downgrade. The MSCI AC Asia Pacific Index is up 1.5% to 260.67. Nasdaq-100 futures are extending gains, up ~0.7%. HK, STI and broader Southeast Asian markets are yet to fully open at time of writing, though the broader AI infrastructure rally is expected to lift the region.

Earnings this week: 

• Friday — ExxonMobil, Moderna, AbbVie, Chevron, Kioxia 

FX: 

• USD weakened for a fifth straight session on July 30, pressured by the Fed’s hold, softer PCE data, the US Dollar Spot Index fell about 0.4% on Wednesday, its largest two-week drop, and extended losses into Thursday. 
• USDJPY dropped as much as 3.3% intraday to 157.98 — its biggest move since December 2023 — and closed near 159.50, marking the largest one-day percentage decline since January 2023, though analysts still see a break below 155 as needed to shift long‑term yen sentiment. 
• Broader G10 FX rallied against the dollar, with NZD and AUD leading gains; AUDJPY briefly hit an almost four‑month low near 110.92 before rebounding to around 112.40, while AUDUSD climbed to roughly 0.7030, up about 1% in New York. 
• EURUSD was additionally underpinned by stronger Eurozone Q2 GDP, while CAD lagged as oil prices fell. 
•  The yuan strengthened to its firmest level since February 2023, with USDCNY touching 6.7550 onshore amid dollar weakness and ongoing PBOC support.

Commodities: 

• Brent crude traded above $89 a barrel, on pace for its biggest monthly advance since March, as the ongoing US-Iran conflict continues to strain supply through the Strait of Hormuz. WTI was near $84 a barrel. The White House's Kevin Hassett said the US may extend measures — including the Jones Act waiver — to keep downward pressure on oil prices if needed.
• Gold was near $4,100 an ounce in early Friday trading, holding a two-day gain and on track for its first monthly gain since February. The metal has been supported by the weaker dollar following Japan's FX intervention and the Fed's decision to hold rates, though it remains 5.8% lower year-to-date.
• LME 3-month copper closed $222 higher at $13,803 a ton on Thursday, with the cash-to-3-month spread rising to its highest since January 2026. LME copper inventories fell 6,900 tons to 255,400 tons. 

Fixed income:  

• The 2s10s and 5s30s spreads extended their post-Fed steepening on Thursday. The 10-year yield fell 1.1bps to 4.671% and the 1-year fell 1.2bps to 4.027%, as the short end drew support from the softer PCE print and a dovish Bank of England statement. The 5s30s spread widened to 82.3bps from 79.5bps. A $13 million options trade targeted the 10-year yield rising to 4.8% within weeks.
•  Schroders, which oversees $1.1 trillion, is increasing bearish Treasury positions and rotating into front-end government bonds in Australia, the UK, and the eurozone, citing doubts over the Fed's ability to control inflation. Japan's 2-year JGB auction on Thursday saw a bid-to-cover ratio of 3.63, well below the 12-month average of 3.81, as rate hike expectations weigh on shorter-dated JGBs.

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