Global Market Quick Take: Asia – July 17, 2025

Global Market Quick Take: Asia – July 17, 2025

Key points:

• Macro: Reports that Trump drafted a letter to fire Fed Chair Powell
• Equities: US stocks inches higher after Trump quells reports of removing Powell
• FX: USD dipped on Powell fears, rebounded on denial, soft PPI
• Commodities: Gold rose, snapping a two-day slide
• Fixed income: Spread between 5 year and 30 year steepest since 2021 at 108bp

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• Trump reportedly showed House Republicans a draft letter to fire Fed Chair Jerome Powell during a private meeting, asking for their input. While many supported the idea, Trump later said he’s “not planning on doing anything” and called it “highly unlikely” he would fire Powell—unless there were grounds like fraud. He also denied drafting a letter, despite earlier reports
• US producer prices were flat in June 2025 after a revised 0.3% rise in May, missing the expected 0.2% gain. Service prices dipped 0.1%, led by a 4.1% drop in traveler accommodation, with declines also in auto retailing, deposit services, airline fares, and food and alcohol wholesaling. Goods prices rose 0.3%, the biggest increase since February, driven by a 0.8% rise in communication equipment.
• UK annual inflation rose to 3.6% in June 2025, the highest since January 2024, up from 3.4% in May and above expectations. The increase was mainly driven by a 1.7% rise in transport costs, especially motor fuel. Airfares, rail fares, and vehicle maintenance also contributed.
• US industrial production rose 0.3% in June, beating expectations of a 0.1% gain after two flat months. Manufacturing edged up 0.1%, while utilities output jumped 2.8%, driven by a 3.5% rise in electricity generation.

Equities:

• US - U.S. stocks closed higher Wednesday after President Trump said he doesn’t plan to remove Fed Chair Jerome Powell, calming earlier concerns. The S&P 500 rose 0.3%, the Dow gained 231 points, and the Nasdaq 100 edged up 0.1% to a record close. Markets had dipped on reports suggesting Powell’s removal, adding to inflation and trade worries. June’s flat Producer Price Index helped ease fears after Tuesday’s hot CPI reading. On the corporate front, Bank of America fell 0.3% on weak revenue, and Morgan Stanley dropped 1.3% despite strong earnings. Goldman Sachs rose 1% after beating profit estimates, while Johnson & Johnson jumped 6.2% on strong results and an upgraded outlook.
• EU - Frankfurt’s DAX slipped 0.2% to 24,048 on Wednesday, marking its fifth straight loss amid trade uncertainty and weak earnings. Hopes for a softer tariff deal faded as President Trump renewed threats to expand tariffs to pharmaceuticals and semiconductors by August 1 under his 'reciprocal' tax plan. EU Trade Commissioner Maros Sefcovic is heading to Washington for talks on the U.S.'s 30% tariff. Automakers led the decline, with Volkswagen down 3.7%, Porsche AG off 3%, and Mercedes-Benz losing 1.9%. Brenntag dropped 2.6% after Deutsche Bank downgraded the stock and cut its price target.
• HK - Hang Seng Index fell 0.3%, to 24,518 on Wednesday, snapping a four-day winning streak after hitting a four-month high earlier in the session. The pullback came as traders took profits and U.S. futures declined following June inflation data, which suggested tariffs may be driving prices higher and dimming hopes for Fed rate cuts. President Trump added pressure by signaling potential tariffs on pharmaceuticals by end-July, with semiconductors possibly next, alongside broader “reciprocal” tariffs set for August 1. Sentiment was further weighed by ASML’s warning of flat 2026 growth despite strong Q2 results. Among the biggest losers were Pop Mart International (-4.3%), Zhejiang Leapmotor Tech (-3.0%), KE Holdings (-2.7%), and China Longyuan Power (-2.5%).

Earnings this week:

• Thursday: Netflix (NFLX), TSMC (TSM), PepsiCo (PEP), Abbott Laboratories (ABT), Interactive Brokers (IBKR).
• Friday: 3M (MMM), American Express (AXP), Charles Schwab (SCHW).

FX:

• USD dipped on reports Trump considered firing Fed Chair Powell, raising concerns over Fed independence. It later rebounded after Trump denied the claims and soft U.S. PPI data supported the recovery. DXY dropped below 98.40.
• EUR gained early on from the dollar's weakness, briefly rising above the 1.17 level, but later trimmed gains as the Powell-related headlines emerged. EUR traded around 1.1630.
• GBP strengthened to above 1.34, benefiting from the softer dollar and a brief boost from UK inflation data.
•  Japan's exports declined by 0.5% YoY, missing expectations of a 0.5% increase in June. This was driven by a sharp 11.4% drop in exports to the U.S. and a 4.7% decline to China, though exports to the EU rose by 3.6%. Imports rose 0.2% YoY, defying forecasts of a 1.1% drop. USDJPY rising to 148.20.

• Economic calendar – Australia: Unemployment, Eurozone: CPI, UK: Jobless claims, Unemployment, US: Retail sales, Initial jobless claims, Philadelphia Fed factory index, Business inventories

Commodities:

• Oil edged higher after a three-day slide, with WTI near $67 and Brent below $69, as traders weighed mixed U.S. inventory data and fresh trade war developments. Crude stockpiles fell, while distillate inventories rose.
• Copper fell as LME stockpiles jumped 10,525 tons, the most since February, driven by Hong Kong deliveries. The city’s new LME status and proximity to China enable quick flows, while U.S. tariff risks weigh on rerouting.
• Gold trimmed earlier gains after President Trump said he’s “not planning” to fire Fed Chair Powell. The metal had surged as much as 1.6% before paring back.

Fixed income:

• Treasury yields ended mixed but generally lower, with the curve steepening sharply after reports—later denied—that President Trump considered firing Fed Chair Powell to accelerate rate cuts. Short-term yields held most of an 8bp drop, while long-end yields were little changed. The 5s30s curve spread peaked near 108bp, the steepest since 2021.

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