Global Market Quick Take: Asia – July 02, 2025

Global Market Quick Take: Asia – July 2, 2025

Key points:

• Macro: US job openings surge above expectations and ISM Mfg PMI edges higher
• Equities: Nasdaq 100 fell 1% with Telsa dropping 5% on feud between Musk and Trump
• FX: CHF reached 0.79; SNB cut rates, may consider negative rates
• Commodities: Gold rose for the second day on Trump's tax bill
• Fixed income: Treasuries dropped, with short-term maturities leading the decline

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• US job openings rose by 374,000 to 7.769 million in May 2025, exceeding expectations and reaching the highest level since November 2024. Accommodation and food services added 314,000 openings, finance and insurance increased by 91,000, while federal government openings fell by 39,000.
• Trump doubts extending the July 9th deadline or reaching a deal with Japan but may have one with India. He suggested Japan could face 30% or 35% tariffs. The US will prioritise India in tariff talks, addressing Japan later, per Nikkei.
• The Senate approved President Trump’s tax-and-spending bill, sending it back to the House. Investors focused on trade as Trump's tariff reprieve neared expiration. Federal Reserve Chair Powell was cautious on rate cuts, citing inflation risks and the need for more data.
• ISM Manufacturing PMI increased to 49 in June 2025 from 48.5 in May, surpassing forecasts of 48.8. Manufacturing contracted for the fourth month, but the pace slowed, with production rebounding to 50.3 and inventories improving to 49.2.
• Eurozone inflation rose to 2.0% in June 2025, meeting expectations and the ECB's target, up from 1.9% in May. Germany's inflation fell unexpectedly, France and Spain saw modest increases, and Italy's rate stayed steady.

Equities:

• US - S&P 500 remained flat near its record level, the Nasdaq 100 dropped 0.9%, and the Dow jumped 500 points. The US Senate narrowly passed Trump's tax bill with a $3.3 trillion budget deficit, raising concerns about Federal debt that might lead the House to object to the changes. Fed Chairman Powell noted most of the FOMC anticipates rate cuts this year, yet yields rose due to unexpectedly high job openings and ISM Manufacturing PMI prices. Tech stocks dropped as Congress dismissed an effort to block AI regulation, resulting in Nvidia, Meta, and Broadcom falling over 3%. Additionally, Tesla fell 5% amid growing tensions between CEO Musk and Trump. 
• EU - Frankfurt's DAX fell 1% to 23,673 on July's first trading day, underperforming mainly due to declines in defense stocks. The drop came after reports of the EU's openness to a US trade deal with a 10% tariff on many exports, excluding pharmaceuticals, alcohol, semiconductors, and aircraft. Eurozone inflation eased to 2% in June, leading ECB President Lagarde to announce at Sintra that the inflation target was met, reducing hopes for more rate cuts. Thyssenkrupp shares plunged 6% after Norway’s sovereign wealth fund blacklisted the defense company, with Hensoldt and Renk each losing 4%.

• HK - Closed

FX:

• USD remained relatively stable despite fluctuating risk sentiment, influenced by US data, Fed Chair Powell's comments, and Capitol Hill developments. Fed Chair Powell maintained a consistent tone with his Congressional testimonies, keeping options open for the July meeting and noting the pause due to tariff sizes. The Senate passed President Trump's tax bill.
• EUR experienced volatility around the 1.18 level following mixed data and ECB comments, including Lagarde's statement that the mission is not yet complete, though disinflationary pressures have eased amid uncertainty.
• GBP traded within the 1.37 range, with UK Manufacturing PMI meeting expectations. BoE Governor Bailey observed signs of economic and labour market softening and indicated a gradual downward trend for interest rates.
• JPY strengthened despite choppy trading, facing late pressure after President Trump suggested Japan might face 30% or 35% tariffs.
• CHF hit 0.79 against USD, it's highest since July 2011, due to safe-haven demand amid US rate cut expectations and trade uncertainties. The SNB cut rates to 0% in June and may consider negative rates and currency interventions if risks persist.

Commodities:

• Oil prices steadied at $67 per barrel after a 0.6% rise, with Middle East tensions and US inventories in focus. Iran's halt in UN communication adds nuclear programme uncertainty. The API reported a 1.4 million barrel drop at Cushing, possibly the lowest since 2005.
• Gold rose for the second day amid Trump's tax bill, expected to increase US deficits. Bullion gained 1.7%, while US stocks dipped and the dollar neared three-year lows. The Senate approved $4.5 trillion in tax cuts and $1.2 trillion in spending reductions.
• Copper hit a three-month high, spurred by late buying in China as factory activity shows recovery. The London Metal Exchange's three-month contract rose 1.3% to $10,000 per ton yesterday, mirroring gains in Shanghai's final trading hour.

Fixed income:

• Treasuries became cheaper, led by short-term maturities, after May's JOLTS job openings and June's ISM manufacturing data exceeded expectations. A large block trade in 2-year note futures further weakened the front-end. Treasury bill yields for August maturities fell after the Senate passed the tax bill, including a $5 trillion debt ceiling increase, potentially allowing government supply announcements next week. New Zealand plans to sell a six-year note through syndication.

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