Global Market Quick Take: Asia – July 07, 2025

Key points:

• Macro: Trump’s tariffs to start 1^st August and Musk launches new political party
• Equities:  Futures down Monday morning due to tariffs
• FX: USD mixed; tariffs start August 1; dollar index near 97
• Commodities: OPEC+ production increase raises oversupply concerns, oil prices decline
• Fixed income: US to sell bonds; Japan's bond yield rises to 1.45%

------------------------------------------------------------------

Disclaimer: Past performance does not indicate future performance.

Macro: 

• Trump announced tariffs will start on August 1. Commerce Secretary Lutnick confirmed duties for next month, while Treasury Secretary Bessent stated tariffs would return to April 2 levels if no deal is reached. Trump's 90-day reprieve on tariffs has been extended due to stalled talks.
• Elon Musk launched a political party, criticising the deficit increase from USD 2 trillion to USD 2.5 trillion under Biden as potentially bankrupting the US.
• In May 2025, Japan's nominal wages rose 1% year-on-year, below the expected 2.4% increase, due to an 18.7% drop in bonus payments. Real wages fell 2.9%, marking the steepest decline in nearly two years.
• China's trade surplus increased to USD 103.22 billion, surpassing expectations of USD 101.3 billion, as exports rose and imports fell more than expected. Exports grew 4.8% year-on-year, below the 5.0% estimate and down from April's 8.1% growth.
• Israel attacked Houthi targets in three Yemeni ports and a power plant, marking its first strike on Yemen in nearly a month, the Israeli military announced on Monday.

Equities:

• US - US market was closed last Friday. US stock futures fell on Monday after President Trump confirmed tariffs will start on August 1. Commerce Secretary Lutnick mentioned on Sunday that the tariffs will resume with rates still being decided amid negotiations. Treasury Secretary Bessent warned that tariffs could revert to April 2 levels if no deal is met. Trump’s 90-day tariff reprieve has been extended due to stalled talks. Last week, the S&P 500 and Nasdaq rose 1.72% and 1.62%, respectively, marking record highs. The Dow gained 2.3%, nearing historic levels. Investors are now focusing on the upcoming earnings season for new market influences.
• EU - European stocks dropped sharply on Friday due to ongoing trade tensions with the US. The Eurozone's STOXX 50 fell 1% to 5,291, while the STOXX 600 dipped 0.5% to 541. The EU Commission is working on a trade deal to avoid US tariffs by the July 9 deadline. US officials stated that the deadline won't be extended, and tariffs could hit 70% if no agreement is reached. ECB warned inflation targets might be missed if the euro remains strong at $1.20. May data shows producer prices fell 0.6%. Losses were led by banks, tech, and industrial firms like BBVA, Siemens, and ASML, which fell around 2.5%. LVMH dropped 1.8% after China announced tariffs on EU brandy.
• HK - Hang Seng fell 0.6% to 23,916 on Friday, marking its second consecutive loss amidst widespread sector declines. The index dropped 1.5% over the week, erasing previous gains, as investors turned cautious ahead of President Trump's July 9 tariff deadline. China's commerce ministry imposed tariffs of up to 34.9% on EU brandy starting July 5, adding to the pressure. Major decliners included AIA Group (-4.6%), Techtronic Industries (-2.9%), and China Overseas Land (-2.3%).

Earnings this week:

FX:

• USD showed mixed performance against G-10 currencies. President Trump confirmed tariffs will take effect on August 1, not July 9, as clarified by Commerce Secretary Lutnick. Dollar index was trading around 97 level.
• AUDUSD slipped 0.1% to 0.6550, while NZDUSD fell 0.2% to 0.6048. The RBA is expected to cut rates, while the RBNZ is likely to hold rates this week, with a cut anticipated in August.
•  Japan's nominal wages rose 1%, missing the 2.4% forecast, due to an 18.7% drop in bonuses in May 2025. Real wages fell 2.9%, the steepest in two years. Slow wage growth raises concerns about Japan's economy and challenges the Bank of Japan. USDJPY traded around 144.40.
• Economic calendar – UK Halifax House Price, EU Retail Sales, Germany Industrial Production

Commodities:

• Oil prices fell as OPEC+ announced a larger-than-expected production increase next month, raising oversupply concerns amid US tariff-related demand fears. Brent dropped 0.7% towards $67.80 a barrel, while WTI neared $66. The decision to boost supply by 548,000 barrels a day aims to meet summer demand and address President Trump's calls for lower fuel costs.

Fixed income:

• US will sell $58 billion in 3-year notes on Tuesday, $39 billion in 10-year notes on Wednesday, and $22 billion in 30-year bonds on Thursday.
• Japan’s 10-year government bond yield rose to 1.45% due to stronger than expected data on Friday.

For a global look at markets – go to Inspiration.