Asia Market Quick Take – August 21, 2025

Asia Market Quick Take – August 21, 2025 

Key points:  

• Macro: FOMC minutes show most prefer to hold rates with 2 dissents 
• Equities: US Tech continues to fall; Pop mart up 12.7% on strong earnings growth 
• FX: RBNZ cuts OCR to 3.00%; dissenters wanted larger cut; NZD falls 
• Commodities: Gold rallies touching $3,500 as yield falls 
• Fixed income: Treasuries rose again despite inflation concerns from FOMC minutes 

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Disclaimer: Past performance does not indicate future performance.

 Macro: 

• Fed July minutes showed most officials favored holding rates, with two dissenting over inflation and labor risks. Investors now look to Powell’s Jackson Hole speech for rate cut signals.
• Trump urges Fed Governor Lisa Cook to resign after mortgage fraud allegations from housing official.
• Australia’s Manufacturing PMI rose to 52.9 in August, the fastest expansion in nearly three years. Output and new orders surged, driven by stronger demand and broader customer bases, including exports to the US, Europe, and Asia-Pacific. Despite rising orders, employment dipped slightly. Input costs rose, though inflation eased.
• Eurozone inflation held steady at 2% in July, matching the ECB’s target for a second straight month and slightly exceeding market expectations of 1.9%.

Equities:  

• US - U.S. stocks mostly fell on Wednesday as tech shares retreated over valuation concerns and doubts about the AI rally's longevity. The S&P 500 dipped 0.2%, the Nasdaq dropped 0.7%, and the Dow ended flat. Tech stocks Broadcom (-1.3%), Palantir (-1.1%), and Intel (-7%) saw significant declines. Retail earnings were mixed: Target fell 6.3% despite exceeding profit forecasts, while TJX and Lowe’s rose 2.7% and 3.3% after beating expectations. Fed minutes revealed most officials prefer steady rates, with two dissenting amid inflation and labor market worries. Investors now await Fed Chair Jerome Powell's Jackson Hole speech for hints on rate cuts. 
• EU - European stocks ended mixed on Wednesday, influenced by a negative session in the U.S. as investors evaluated global rate outlooks and Ukraine war developments. The Eurozone's STOXX 50 fell 0.2% to 5,472, while the STOXX 600 increased 0.3% to 559. Industrial firms like Siemens, Airbus, Schneider, and Rolls Royce dropped between 3.5% and 2% following earlier gains. Meanwhile, consumer defensive stocks surged, with Danone, L'Oreal, and AB InBev rising over 1%. Investors looked to upcoming FOMC minutes for clues on reactions to lower payroll figures and higher PPI. 
• HK - Hang Seng climbed 0.2% to 25,166 on Wednesday, ending a four-day losing streak as market sentiment improved with a rally in Chinese equities. This was driven by the PBoC's decision to keep lending rates unchanged, aimed at boosting liquidity and tackling deflation. Property and financial stocks rose, while consumer stocks dipped slightly. Pop Mart Intl. jumped 12.7% on strong earnings and guidance, and Sunny Optical surged 10%. Other significant gains included Laopu Gold (8.9%), Mixue Group (5.7%), and HKEX (1.6%). 

Earnings this week: 

• Thursday: AIA (HKG: 1299), Sinopec (SHA: 600028), Goodman Group (ASX: GMG), Kuaishou (HKG: 1024), Sany Heavy (SHA: 600031), Walmart (WMT), Intuit (INTU), Workday (WDAY) 

• Friday: Bank of Jiangsu (SHA: 600919), CRRC (SHA: 601766), China Coal (HKG: 1898), Hengli Petrochemical (SHE: 000703), China Vanke (SHE: 000002), BJ’s Wholesale Club (BJ) 

FX: 

• Dollar Index slipped slightly as bullish momentum eased, tempered by hawkish FOMC Minutes that underscored inflation risks over labor market slowdowns. This balance remains crucial for future Fed policy directions. 
• CHF, NOK, and JPY outperformed the dollar. In the G10 space, the RBNZ cut its OCR by 25bps to 3.00%, with two members dissenting, favoring a larger cut due to easing inflation and spare capacity, causing the NZD to underperform at 0.5830.  
• GBP's initial strength faded after a hotter-than-expected UK CPI, driven by surging airfares. The BoE remains focused on unchanged food inflation. With hawkish dissent and strong GDP and job data, markets expect slower rate cuts. GBPUSD stands at 1.3450. 
• China plans to approve a CNH internationalization strategy later this month, considering yuan-backed stablecoins to enhance its global use, according to Reuters. Meanwhile, the PBoC maintained its 1 and 5-year LPR rates at 3.00% and 3.50%. 
  
  Economic Calendar - EU HCOB Composite PMI Flash, EU Consumer Confidence Flash, UK S&P Global Manufacturing PMI Flash, UK S&P Global Services PMI Flash, US Initial Jobless Claims, US S&P Global Manufacturing PMI Flash, US S&P Global Services PMI Flash, US Existing Home Sales 

Commodities: 

• Oil held gains with U.S. crude stocks dropping sharply, keeping them below seasonal norms. WTI traded near $63 after rising over 1%, while Brent closed below $67. Nationwide inventories fell by 6 million barrels, and gasoline stocks declined for the fifth week. 
• Gold climbed as traders evaluated the potential direction of U.S. monetary policy ahead of a significant speech by Federal Reserve Chair Jerome Powell tomorrow. Spot gold rose by 0.8% to $3,344, with silver, platinum, and palladium also making gains. 

Fixed income:  

• Treasury gained, initially led by short-term maturities as yields fell after the White House called for a Federal Reserve governor's resignation, aiming to remake the central bank for lower interest rates. A strong 20-year bond auction later supported long-term yields. Short-term yields slightly recovered after Fed meeting minutes revealed inflation concerns. UK gilts led global gains despite unexpected inflation, maintaining predictions for another Bank of England rate cut. New Zealand's 10-year bond yields fell 4 basis points to 4.35%, extending previous declines after the Reserve Bank's dovish policy decision. Markets now see a 79% chance of a 25 basis point rate cut at the RBNZ’s October meeting. 

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