Global Market Quick Take: Asia – July 08, 2025

Global Market Quick Take: Asia – July 8, 2025

Key points:

• Macro: Trump announces tariffs on Japan and Korea starting 1^st August
• Equities:  Equities fall after Trump announces new tariffs
• FX: USD strengthened amid Trump's tariffs; SEK rose, JPY, AUD, NZD fell
• Commodities: Oil gained despite OPEC+ supply increase; rebounded on tariffs
• Fixed income: T-Notes steepened; yields rose across maturities

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• President Trump announced 25% tariffs on South Korean and Japanese imports starting August 1, with threats of escalation if retaliated. Additional tariffs of 25%-40% were imposed on 14 countries, including South Africa and Thailand. Treasury Secretary Bessent indicated upcoming trade announcements before Wednesday's deadline.
• Trump has cautioned that countries supporting BRICS alliance policies contrary to US interests will face an additional 10% tariff.
• Japan's current account surplus rose to JPY 3,436.4 billion, exceeding expectations. The services account turned to a JPY 201.1 billion surplus, and the goods deficit narrowed to JPY 522.3 billion.
• The Halifax House Price Index in the UK rose 2.5% year-on-year, the smallest increase in eleven months. House prices stalled month-on-month, with the average property price at £296,665. Mortgage approvals and transactions have increased as more buyers return to the market.

Equities:

• US - US stocks dropped sharply on Monday as President Trump reignited trade tensions by announcing new tariffs, extending their implementation deadline to August 1. The S&P 500 and Nasdaq fell 0.8%, retreating from last week’s record highs, while the Dow dropped 422 points. Trump revealed 25% tariffs on imports from Japan and South Korea, with up to 40% levies on goods from countries like Malaysia, Myanmar, and South Africa. He also threatened a 10% tariff on nations following “Anti-American policies of BRICS,” as the bloc held a summit in Brazil. Treasury Secretary Scott Bessent indicated more trade announcements were imminent. Shares of trade-sensitive companies like Toyota (-3.9%), Honda (-3.8%), Apple (-1.7%), and AMD (-2.2%) declined, while Tesla fell 6.8% after Elon Musk’s new political party announcement caused investor concern.

FX:

• USD strengthened as President Trump sent trade letters to 14 countries, including Japan and South Africa, imposing tariffs of 25%-40%. The letters target transhipped goods and warn against retaliation, threatening higher tariffs on countries that evade or retaliate. USD strengthened against most G10 currencies, except SEK, which gained following a hotter-than-expected June CPIF report. JPY, AUD, and NZD underperformed. Dollar index rising above 97.3 level.
• EUR weakened due to dollar strength, testing the 1.1700 level, amid trade uncertainty. The EU will not receive a letter imposing higher tariffs from the US.
• GBP fluctuated around 1.3600 but performed better than other cyclical currencies, which struggled in a risk-averse market.
• JPY weakened throughout the day due to soft wage data and USD strength, pushing USDJPY above 146.
• Economic calendar – Australia NAB Business Confidence, Australia RBA Interest Rate Decision, Germany Balance of Trade, Canada Ivey PMI

Commodities:

• WTI rose to $67.93 and Brent increased to $69.6, firming despite bearish OPEC+ news. Initially, prices fell after OPEC+ agreed to increase August supply by 548k BPD. They recovered due to higher-than-expected Saudi OSPs and further rebounded as President Trump announced new tariffs on several countries, lifting WTI and Brent to session highs.
• Gold fell 1.2% after Trump announced 25% tariffs on Japan and South Korea, effective August 1, but later trimmed losses. Bullion remains up over 25% this year amid geopolitical tensions. XAUUSD was down 0.2% to $3,330.04.

Fixed income:

• T-Notes steepened ahead of upcoming supply, Trump's trade letters, and the FOMC Minutes. At settlement, yields increased across maturities: 2-year rose by 2.1bps to 3.903%, 5-year by 3.2bps to 3.966%, 10-year by 5.5bps to 4.395%, and both 20-year and 30-year by 7.1bps and 7.6bps respectively, reaching 4.932%.

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