Global Market Quick Take: Asia – July 09, 2025

Global Market Quick Take: Asia – July 9, 2025

Key points:

• Macro: Lutnick expects 15-20 trade letters to be sent over next 2 days
• Equities:  Hong Kong and Europe rises but US is flat
• FX: USD gains; AUD rises after RBA holds rates steady
• Commodities: Copper futures hit record high after Trump announces 50% tariff
• Fixed income: T-Notes yields increase; US auctions 3-year notes at 3.891%

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• Trump confirmed no changes to duties on 14 countries, including Japan and South Korea, introduced a 50% tariff on copper imports, and signaled more sector-specific tariffs. He also threatened up to 200% tariffs on pharmaceutical imports, with implementation delayed by 12 to 18 months.
• In June 2025, US 1 year consumer inflation expectations dropped to 3%. Commodity price expectations rose for gas (4.2%), medical care (9.3%), college education (9.1%), and rent (9.1%).
• RBA held its cash rate at 3.85%, defying expectations for a cut. The decision was supported by six members, citing balanced inflation risks and a strong labour market. The board remains cautious amid uncertainties and will await more data to confirm inflation's return to the 2.5% target.
• Taiwan's trade surplus rose to USD 12.07 billion from USD 4.70 billion. Exports reached USD 53.32 billion, led by information, communication, and audio-video products (82.5%) and electronic parts (31.1%). Exports grew to the US, ASEAN, Japan, and China & Hong Kong, but fell to Europe.

Equities:

• US - US stocks remained mostly unchanged on Tuesday amid mixed signals from President Trump regarding tariffs. Initially postponing "Liberation Day" duties to August 1, Trump later announced no further extensions, adding to trade uncertainty. The S&P 500 and Nasdaq closed flat, while the Dow dropped 165 points. Trump's announcement of a 50% tariff on copper imports caused copper futures to surge over 10%, boosting shares of Freeport-McMoran and Southern Copper. Pharmaceutical stocks reduced gains after Trump hinted at a 200% tariff on foreign drugs, with a potential one-year grace period. Tesla rose 1.3%, while Amazon fell 1.8% as its Prime Day began. Investors are looking forward to the Fed's June meeting minutes on Wednesday and Delta Air Lines' earnings later in the week.
• EU - European stocks rose sharply on Tuesday as markets considered the impact of US tariffs on European exports. The Eurozone's STOXX 50 rose by 0.5% to 5,370, and the STOXX 600 climbed 0.4% to 545. The US imposed tariffs on various Asian countries but excluded the EU from these measures, highlighting comments by EU officials suggesting a possible 10% US tariff. Auto makers like BMW and Stellantis benefited, rising by 2% and 3%, respectively, due to the adverse effects on Asian competitors. UniCredit gained 1.9% amid expectations that the EU will reject Italy's conditions for its takeover of Banco BPM. Novo Nordisk, outside the Eurozone, surged by 2%.
• HK - Hang Seng rose 1.1% to close at 24,148 on Tuesday, marking its first gain in four sessions. Market sentiment improved after China's leaders vowed to tighten oversight on aggressive price cuts, a move expected to support a rebound in producer prices and enhance long-term earnings. The tech index jumped 1.8%, aided by optimistic profit alerts from various firms, while consumer stocks benefited from optimism over increased demand due to subsidies from food delivery services. Leading advances were Chow Tai Fook Jewellery (4.4%), BYD Electronic (3.3%), SMIC (3.2%), and Meituan (2.6%).

FX:

• USD experienced modest gains with varied performance against its G10 currency peers. Dollar Index (DXY) rose above the 97.5 level as market participants looked forward to FOMC Minutes set to be released on Wednesday.
• AUD rose to above 0.6540 after the RBA unexpectedly kept interest rates at 3.85%, defying expectations of a cut. The RBA's statement showed a balanced view on inflation, indicating they could wait for more data. Governor Bullock expressed confidence in the potential for further easing.
• CHF and EUR gained against the Dollar, with the Euro's focus on trade updates. Reports suggested the US proposed a 10% tariff deal to the EU, though negotiations are ongoing. Trump indicated positive discussions with the EU.
• JPY weakened past 146 against USD as US tariffs on Japanese goods dampened sentiment. Ahead of the July 20th elections, Japanese officials, led by Prime Minister Ishiba, vowed to defend national interests despite Trump's threats of retaliation.
• Economic calendar – China Inflation Rate, China PPI, US MBA 30-year Mortgage Rate, US FOMC Minutes

Commodities:

• Crude oil extended Monday's gains, with WTI and Brent prices influenced by US trade letters and geopolitical developments, including resumed ceasefire talks in Doha. Prices rose with US trading, peaking at $68.91 and $70.68.
• Copper futures jumped over 10% to above $5.5 per pound after President Trump announced a 50% tariff on copper imports. This move aims to enhance domestic production and aligns copper duties with existing steel and aluminium tariffs, heightening trade tensions and market volatility.

Fixed income:

• T-Notes saw increased yields as focus shifted to supply and trade updates. Settlement yields rose: 2-year at 3.907%, 5-year at 3.985%, 10-year at 4.415%, and 20-year and 30-year at 4.944%. The US auctioned USD 58 billion in 3-year notes at a 3.891% yield, with an average 0.4bps tail.

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