Global Market Quick Take: Asia – July 03, 2025

Global Market Quick Take: Asia – July 3, 2025

Key points:

• Macro: US ADP employment misses at –33k vs 99k expected
• Equities:  S&P 500 rose 0.5% to new record highs, with tech names leading
• FX: GBP fell due to UK political uncertainty and data
• Commodities: Copper reached $10,000 a ton on the LME, its highest since 26 March
• Fixed income: UK 30-year yield climbed 22 basis points, triggering a global bond selloff

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• In June 2025, US ADP private businesses lost 33K jobs, marking the first decline since March 2023, following a revised loss of 29K in May, and falling short of the forecasted 95K job gain.
• Trump continued criticizing Federal Reserve Chair Jerome Powell, urging him to resign. Without naming him directly, Trump posted on Truth Social that "'Too Late' should resign immediately," criticising Powell for delayed interest rate cuts.
• Trump announced on Truth Social that the US has completed a trade agreement with Vietnam, featuring a 20% tariff on Vietnamese imports, which is notably lower than the 46% rate established in April. Goods that are deemed to have been transshipped will be levied at 40%.
• Chancellor Rachel Reeves appeared emotional during Prime Minister’s questions, lacking PM Keir Starmer's explicit support after a welfare bill U-turn. Despite Downing Street denying resignation rumours, markets grew uneasy, fearing instability around Reeves could impact the UK's economic plans.

Equities:

• US - S&P 500 rose 0.5% to a record high, and the Nasdaq increased by 0.8%, while the Dow remained flat. Gains were driven by tech stocks and a US-Vietnam trade deal that imposes 20% tariffs on certain imports. Investor confidence was boosted by trade optimism and weaker ADP labour data that reported a 33,000 drop in hiring versus a gain of 98,000, suggesting potential Federal Reserve rate cuts. Apple, Nvidia, and Tesla led the tech rally, pushing the Nasdaq higher. Meanwhile, President Trump's tax-and-spending bill, projected to add $3.4 trillion to the national debt, passed the Senate but faced possible delays in the House due to political divisions.
• EU - DAX increased by 0.3% to just over 27,300, aiming to recover from two days of losses. US-EU trade discussions continue, with the US advocating for a 10% tariff, while the EU seeks exemptions for sectors such as alcohol and pharmaceuticals. ECB President Christine Lagarde is set to speak at the central bank's forum in Sintra, Portugal. In corporate news, auto stocks led gains, with BMW up 2.7%, alongside Daimler Truck and Mercedes-Benz, while tech and banking stocks also performed well. Conversely, defence stocks like Rheinmetall fell by 2.4%.
• HK - Hang Seng rose 0.6% to 24,221, ending a three-day decline with sector-wide gains. Optimism was further bolstered by U.S. Treasury Secretary Bessent's remarks on potential Federal Reserve rate cuts by September, in line with President Trump's push for easing. Investors also anticipated China's Politburo meeting, where new stimulus might be discussed to offset the impact of U.S. tariffs. Notable movers included New World Development, which soared 9.7% on a USD 11.2 billion refinancing deal, Geely Auto, up 2.4% after raising its sales target, and other gainers like Sands China (5.8%), Galaxy Entertainment (5.7%), and CSPC Pharma (3.5%).

FX:

• USD experienced modest gains, primarily due to its strength against the GBP, which faced unique risks in the UK. However, the overall increase in the DXY was limited by negative US data, including a disappointing ADP report showing a loss of 33,000 jobs.
• GBP declined to 1.3650, influenced by political uncertainty in the UK, which also impacted Gilts during Prime Minister's Questions (PMQs). UK PM Starmer did not confirm whether Chancellor Reeves would continue in her role and did not rule out the possibility of tax increases. Despite this, the PM's Secretary later clarified that the Chancellor has the full support of the Prime Minister.
• EUR ended slightly weaker after mixed movements, with ECB comments having little impact. Centeno was cautious on rates, and Rehn worried about inflation below 2%.
• JPY stayed stable, trading near 143.50 amid trade-related uncertainty, as negotiator Akazawa stressed that agreements shouldn't compromise Japan's national interests for timing.
• Economic calendar – AU Balance of Trade, Canada Balance of Trade, US Non Farm Payrolls, US Unemployment Rate, US Balance of Trade, US Initial Jobless Claims

Commodities:

• Oil stabilised after its biggest gain in nearly two weeks, driven by optimism from a US-Vietnam trade deal. WTI traded above $67, with Brent crude near $69. The deal follows agreements with the UK and China, as partners rush to finalise US deals before 9 July.
• Copper exceeded $10,000 a ton as traders exploited price differences between London, New York, and Shanghai. The three-month futures hit $10,020.50 on the London Metal Exchange, its highest since 26 March, and stayed within a narrow range.

Fixed income:

• Treasuries bear-steepened as the long end of the curve faced losses. The US curve was affected by President Trump's ambitious timeline for his bill. Initial front-end gains from a 33,000 drop in ADP employment change were reversed throughout the day. The global bond selloff was led by gilts, with UK 30-year yields rising over 20 basis points during the London session, driven by speculation about Chancellor Rachel Reeves' potential exit. JGB Futures suggest a decline in government bonds as US and UK yields rose amid tensions within Britain's Labour government. Investors are also watching Japan's 30-year sovereign note auction later in the day.

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