Asia Market Quick Take – August 22, 2025

Asia Market Quick Take – August 22, 2025 

Key points:  

• Macro: Japan CPI increases 3.1% and US Composite PMI rises to 55.4 
• Equities:  Walmart sank 4.5% after missing earnings for first time since 2022 
• FX: USD strengthens; PMI data and Fed remarks signal potential rate cut delay
• Commodities: Gold retreated as the U.S. dollar and yields rose 
• Fixed income: Japan's 20-year yield reached 2.655%, the highest since 1999 

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Disclaimer: Past performance does not indicate future performance.

 Macro: 

• Japan’s core CPI increased 3.1% in July 2025, slightly below June's 3.3% but above expectations. This rate exceeds the BOJ's 2% target, raising speculation about further rate hikes amid inflation pressure and weak wage growth, though Governor Ueda remains cautious on underlying inflation.
• US initial jobless claims increased by 11,000 to 235,000 in mid-August, exceeding expectations. Outstanding claims rose by 30,000 to 1,972,000, the highest since late 2021, signaling a labor market slowdown amid muted hiring.
• The UK's order book balance fell to -33 in August 2025, below the expected -28. Manufacturing output dropped sharply, with further declines expected through November. Order books were below average, while finished goods stocks stayed adequate but below historical levels.
• S&P Global US Composite PMI rose to 55.4 in August 2025 from 55.1 in July, indicating ongoing growth for 31 consecutive months and the strongest expansion this year. Services growth held steady, while manufacturing rebounded to 53.3, its highest since May 2022.
• The EU and US agreed on a trade deal covering secure supply chains, including tariff rate-quota solutions, and will tackle "unjustified digital trade barriers." The EU won't impose network usage fees and will collaborate on domestic steel and aluminum markets. EU firms plan to invest an extra $600 billion in US sectors by 2028, with the EU purchasing $750 billion in US energy products and $40 billion in AI chips.

Equities:  

• US - The S&P 500 fell 0.4% Thursday, its fifth straight drop, as investors awaited Fed Chair Powell’s Jackson Hole speech. The Dow lost 153 points, and the Nasdaq 100 slipped 0.5% on tech weakness. Walmart sank 4.5% after missing earnings for the first time since 2022, despite raising its full-year outlook, while broader retail softness fueled consumer concerns. Jobless claims rose more than expected, but PMI data showed the fastest business activity in three years, underscoring a mixed economy. Markets now price a 73% chance of a September rate cut ahead of Powell’s remarks. Zoom is up 5.7% post market after reporting earnings that beat estimates with revenue growing 4.7% yoy. In early Asia session, Nvidia also announced that they are suspending production of H20 chips to China.
• EU - The DAX in Frankfurt fell 0.4% to around 24,180 on Thursday afternoon despite positive tariff news. The EU and US agreed to cap most EU export tariffs at 15%, covering key sectors like autos, pharmaceuticals, and semiconductors. Traders also digested resilient PMI data, with Germany’s private sector activity improving in August on stronger manufacturing. Markets now await the Fed’s Jackson Hole symposium for rate outlook signals. Beiersdorf and Heidelberg Materials led losses, down 2.4% and 2%, while BMW, Porsche, and Merck slipped about 1%. 
• HK – HSI fell 0.24% to 25,105 on Thursday, reversing early gains as U.S. futures weakened after hawkish Fed minutes and Powell’s warning on tariff-driven inflation. Reuters reported China may allow yuan-backed stablecoins to boost global adoption, signaling a potential policy shift. Tech and consumer stocks led losses ahead of Hong Kong’s July inflation data. China Resources Power plunged nearly 6% on weak earnings, while Baidu slid 2.6% after a revenue miss. Other notable decliners included Laopu Gold (-4%), Meituan (-3%), and Xiaomi (-2.3%). 
• SG - STI increased by 0.3% to reach 4,230.90. Sats led the gains within the STI, climbing 2.5% to $3.26, while DFI Retail Group was the biggest loser, dropping 11% to US$3.16. Among local banks, DBS rose 1.2% to $50.60, UOB increased 0.3% to $35.09, but OCBC decreased 0.1% to $16.87. 

Earnings this week: 

• 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: 

• USD gained strength due to robust S&P Global Flash PMIs and hawkish remarks from Fed officials. The Manufacturing PMI surprisingly entered expansion territory, signaling potential rate hikes as inflation might exceed the Fed's 2% target. DXY rose to 98.60.
• G10 currencies fell against the dollar with safe-havens CHF and JPY lagging, USDCHF hovered around 0.8080. Japan's inflation eased to 3.1% in July 2025, with falling electricity prices and stable core inflation matching the headline rate. USDJPY traded around 148.30 
• EURUSD above 1.16 but did not breach it after initial weakness due to Ukraine-Russia tensions. Positive PMI reports from France and Germany helped the Eurozone composite PMI move higher. 
• GBP fluctuated between a low of 1.3406 and a high of 1.3482, buoyed by strong UK composite and services PMI figures.  
• NZD struggled to recover from post-RBNZ losses, while AUDUSD and NZDUSD traded within tight ranges around 0.6420 and 0.5820, respectively. 

Economic Calendar – France Business Confidence, Canada Retail Sales, US Fed Chair Powell Speech, Jacoson Hole Symposium 

Commodities: 

• Oil remained stable as markets eyed Russian crude flows to India amid rising criticism from a Trump official ahead of a tariff hike. WTI was near $63 per barrel, with Brent below $68. Trade Adviser Peter Navarro criticized India's role and expected U.S. tariffs to double on August 27. 
• Gold slipped as investors awaited the Jackson Hole meeting for interest rate insights. Trading near $3,340, gold erased some of yesterday’s gains as US dollar and yield rose.  

Fixed income:  

• Treasuries fell due to stronger-than-expected August business activity data and Cleveland Fed President Hammack's remarks that current conditions don't support a September rate cut. Fed-dated OIS contracts reduced expectations for multiple rate cuts this year. Yields dipped from session highs after strong demand for a 30-year TIPS auction. Japan's 20-year yield hit 2.655%, its highest since 1999, amid fiscal expansion concerns and declining interest from major investors. 

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