Asia Market Quick Take – August 13, 2025

Global Market Quick Take: Asia – August 13, 2025

Key points:

• Macro: US Core CPI increases driven by services; Goods inflation stays tame
• Equities: Sea Limited gained 19% after strong Q2 revenue growth
• FX: Dollar Index lower after CPI; RBA cuts rate to 3.6% by 25 bps
• Commodities: Oil slides while gold remains steady
• Fixed income: Yield curve steepens as front end supported by rate cut bet

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Underlying US inflation quickened in July, with the core consumer price index rising 0.3% from June (3.1% yoy vs 3% est), driven by higher services prices such as airfares, medical care, and recreation. Tariff-exposed goods costs rose less than anticipated, reinforcing expectations for a Federal Reserve rate cut next month. The core CPI, excluding volatile food and energy items, marked its strongest increase since the year's start, matching economists' predictions alongside the overall monthly CPI, according to Bureau of Labor Statistics data.
• US tariff revenue hit a new monthly record in July, yet it couldn't thwart a growing budget deficit, highlighting ongoing fiscal challenges for the federal government. Customs duties soared to $28 billion, a 273% increase over July last year, according to a Treasury Department release on Tuesday. Meanwhile, the budget deficit reached $291 billion, a 10% rise from the same month last year, considering calendar adjustments.
• Japan's producer prices rose 2.6% year-on-year in July 2025, slightly above forecasts and marking the lowest inflation since August 2024. Several sectors, including transport equipment and food, saw cost moderation, while prices for chemicals and steel continued to fall.
• Trump may consider expanding the revenue share agreement on China chip sales to companies beyond Nvidia and AMD, while China encourages firms not to use Nvidia and AMD chips.

Equities: 

• US - US stocks surged Tuesday, with the S&P 500 and Nasdaq setting record highs, each up over 1%, while the Dow gained over 500 points due to lower-than-expected July inflation data. This fueled hopes for a September rate cut by the Federal Reserve. Reduced trade tensions after Trump's tariff pause on Chinese goods and strong corporate results boosted sentiment. Intel jumped 5.3% following Trump’s praise for its CEO, and Meta rose nearly 3%. Sea Limited gained 19% after reporting strong Q2 revenue growth of 38.2% to $5.3 billion, beating estimates of $4.55 billion and net income rising to $414.2 million from last year's $79.9 million. Adjusted EPS was $0.65, below the expected $0.77.
• EU - European stocks edged up on Tuesday, with the STOXX 50 and STOXX 600 both gaining about 0.2%. The rise followed an extension of the US-China trade truce, as Trump prolonged tariff suspension for 90 days and China matched the move. Investors reviewed European economic data with no major earnings reports due. In the UK, labor market cooling persisted but wage growth stayed high. Schneider Electric, Rio Tinto, and Merck saw gains over 1%, while BNP Paribas climbed 0.6% to its highest in 18 years at €82; however, SAP shares dropped nearly 1%.
• HK - Hang Seng Index gained 0.25% to close at 24,970, marking its second consecutive rise as US-China tariff truce renewals improved sentiment. Mainland markets are optimistic ahead of October's economic conference. China's vehicle sales soared 14.7% year-on-year in July. Sector advances in Hong Kong included financial, property, and consumer stocks, with Galaxy Entertainment and SMIC posting significant gains. Galaxy Entertainment jumped 1.2% on higher H1 profit. Meanwhile, China Evergrande Group's Hong Kong shares will be delisted on August 25, after failing to fulfill listing requirements, following a court-ordered liquidation originating in January 2024.
• SG - Straits Times Index decreased by 0.3% to 4,220.72. The Ministry of Trade and Industry increased its 2025 growth forecast to 1.5-2.5% due to better-than-expected early-year results but warned of uncertain future conditions. Keppel's stock dropped 3.1% to $8.31 after announcing plans to sell M1’s telecommunications arm to Simba Telecom for $1.43 billion, incurring a $222 million loss primarily from goodwill and intangible assets.

Earnings this week:

• Wednesday: Cisco (CSCO), Brinker International (EAT), Tencent (700HK), Asics Corp (7936JP), Commonwealth Bank of Australia (CBA)
• Thursday: JD.com (JD), Applied Materials (AMAT), John Deere (DE), SOMPO (9630JP), NetEase (9999), Tapestry (TPR)
• Friday: Flowers Foods (FLO), Alibaba (9988HK), Sands China (1928HK)

FX:

• Dollar Index dropped to 98 following a US inflation report that didn’t appear strong enough to prevent a potential September rate cut by the Fed. Core goods inflation rose to its highest since June 2023, but Trump’s comments about a lawsuit against Fed Chair Powell further pressured the dollar.
• GBP gained from a UK jobs report indicating a softer but not rapidly deteriorating labor market, increasing focus on upcoming UK CPI data post-BoE decision. GBPUSD near 1.35 level.
• EURUSD remained stable around 1.1670 despite disappointing German ZEW data, influenced mainly by dollar weakness.
• AUD initially lagged after the RBA announced an anticipated rate cut to 3.60% and downgraded Australia’s productivity and GDP growth outlook. However, the AUD later aligned with other G10 currencies due to overall dollar softness. AUDUSD traded around 0.6530.
• JPY mildly appreciated, with USDJPY dropping below 148 due to dollar weakness. Focus has now shifted to upcoming Japanese PPI data.
• Economic Calendar – Australia Home Loans, Australia Investment Lending for Homes, Germany Wholesale Prices, US MBA 30-yr Mortgage Rate

Commodities:

• Oil held steady after Tuesday's decline as investors awaited US-Russia talks on Friday. WTI traded near $63 post 1.2% drop, Brent near $66. US Secretary Rubio spoke with Russia's Lavrov, but doubted a Ukraine breakthrough.
• Gold held a modest gain after US inflation matched forecasts, strengthening expectations for a rate cut next month. Bullion stayed steady after rising 0.2%, as goods prices' mild increase eased tariff concerns.

Fixed income:

• Treasuries were mixed; front-end yields fell while long-end yields rose after July's CPI report posed no barrier to a Fed rate cut in September. A larger selloff in European long-term bonds helped steepen the US yield curve. The US 10-year yield, close to 4.29%, was less than 1bp cheaper, outperforming German and UK bonds as their yields jumped 7bp-8bp, with Germany's 30-year reaching its highest since 2011. Fed OIS rates decreased, suggesting a 97% chance of a quarter-point cut in September, supporting front-end.

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