Global Market Quick Take: Asia – July 31, 2025

Key points:

• Macro: Trump slaps 25% tariff on India plus penalty and August 1^st deadline is firm
• Equities:Meta and Microsoft gained 11.5% and 8.5% in after hours
• FX: USD Index rose neared 100, driven by GDP and Powell's comments
• Commodities: Copper futures on Comex dropped 20%, marking the largest intraday fall ever
• Fixed income: Powell's FOMC remarks, despite two dissents, lowered expectations for a September rate cut

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Disclaimer: Past performance does not indicate future performance.

Macro:

• The Fed maintained rates at 4.25%–4.50% for the fifth consecutive meeting, with two governors dissenting for a cut, a dual dissent not seen since 1993. Policymakers noted economic activity moderation in H1, contrasting earlier solid growth assessments. Unemployment remains low, inflation elevated, and economic uncertainty persists.
• US private businesses added 104,000 jobs in July 2025, surpassing the expected 75,000 and marking the strongest gain since March. The service sector contributed 74,000 jobs, led by leisure and hospitality (+46,000), financial activities (+28,000), and trade, transportation, and utilities (+18,000), while education and health services lost 38,000 jobs.
• Trump asserted that the August 1st deadline is firm and won't be extended, adding that India will face a 25% tariff plus a penalty starting August 1st. He also imposed 50% tariffs on Brazilian goods, and 15% on South Korean goods.
• Japan's retail sales increased by 2.0% year-on-year in June 2025, up from 1.9% in May and above the expected 1.8%, marking the 39th straight month of growth, supported by rising wages.
• The US economy grew 3% annualized in Q2 2025, beating expectations of 2.4% and rebounding from a 0.5% Q1 contraction. Growth was driven by a 30.3% plunge in imports and faster consumer spending (1.4% vs 0.5% in Q1), led by goods (2.2% vs 0.1%). It marked the tamest consecutive quarterly growth since the pandemic.

• Equities: 

• US - US stocks mostly fell Wednesday after the Fed kept interest rates steady at its July meeting. S&P 500 dipped 0.1%, the Dow dropped 171 points, and the Nasdaq rose 0.2%. Fed chair Powell said they're still analyzing Trump's tariff hikes' inflation impact, lowering near-term easing hopes. The rate decision wasn't unanimous, with Fed members Bowman and Waller advocating for a 25 basis-point cut. Meta and Microsoft both reported earnings after the close that beat expectations with Microsoft showing strong growth from its Azure cloud business. Microsoft gained 8% while Meta rose 11.5% after hours. Arm Holdings fell 8.5% and Qualcomm dropped 5% following the release of their earnings reports.
• EU - DAX tried to recover, rising 0.2% before settling near flat, as traders analyzed corporate earnings, economic data, and trade talks. Germany's economy shrank by 0.1% in Q2 after 0.4% growth in Q1, matching forecasts. The German cabinet approved the 2026 budget, featuring a record €126.7 billion investment and €174 billion in planned borrowing for infrastructure and defense. On the corporate side, Porsche AG rose over 3% with a strategic overhaul despite a €400 million tariff impact. Siemens Healthineers climbed more than 2% on strong Q3 results and improved guidance. Adidas dropped nearly 8% after missing revenue targets and issuing a profit warning, while Mercedes-Benz fell 1% after its first-half profit halved, prompting a cut in its revenue forecast for the year.
• HK- Hang Seng dropped 1.4% to 25,177 on Wednesday, continuing losses from the previous session amid widespread declines ahead of the Fed. Tech stocks plunged 2.7%, while consumer and financial sectors fell around 1.5% following unsuccessful U.S.-China trade talks, with tariff decisions pending from President Trump. Focus shifted to upcoming PMI data for July in China amid deflation worries and trade barriers. Losses were limited by mainland stocks' third consecutive gain, hinting at a potential bull market. Hang Seng Bank fell 7.3% after its H1 profit dropped 30%. CATL dropped 5% as Tesla inked a supply deal with LG Energy.

Earnings this week:

• Thursday: Apple (AAPL), Amazon (AMZN), Reddit (RDDT), AbbVie (ABBV), Merck (MRK), Coinbase (COIN), Comcast (CMCSA)
• Friday: Chevron (CVX), Exxon (XOM)

FX:

• USD strengthened, with the DXY nearing 100, boosted by stronger-than-expected GDP data and hawkish comments from Fed Chair Powell following the FOMC meeting, where the Fed maintained the Federal Funds Rate. The decision wasn't unanimous, with dissenting votes from Governor Waller and Vice Chair Bowman, who favored a 25bps rate cut. Powell emphasized commitment to countering inflationary pressures from tariffs.
• EUR fell to $1.1430 amid a stronger dollar post-Fed decision. Eurozone GDP grew 0.1% in Q2, with mixed national outcomes. Concerns remain over US-EU trade benefits.
• GBP dropped below 1.3250, influenced by US data and Powell's remarks, with few UK drivers to support the currency.
• JPY weakened, with USDJPY firmly above 149, as attention shifted to the BoJ policy announcement.
• CAD weakened past 1.38 against USD, its lowest in two months, due to US dollar strength and domestic challenges. The BoC held rates at 2.75%, amid economic uncertainties.
• Economic Calendar – Australia Retail Sales, China NBS Manufacturing PMI, Japan BoJ Interest Rate Decision, Japan Consumer Confidence, France Inflation Rate, Germany Inflation Rate, US Core Price Index, US Personal Income, US Personal Spending,

Commodities:

• The US copper market saw its largest intraday drop after President Trump exempted refined copper from planned tariffs. Starting August 1, a 50% tariff will apply only to semi-finished copper products. US copper futures on Comex fell 20%, having previously traded 28% above London Metal Exchange benchmarks, expecting tariffs on all refined imports.
• Oil remained steady after reaching a six-week high as Trump threatened penalties on India for buying Russian crude and cracking down on Iranian supplies. WTI traded above $70, Brent near $73. Trump noted tariffs and ongoing talks with India.
• Gold rose slightly after a sharp drop when Powell's comments reduced bets on a September rate cut. Trading near $3,285 an ounce after a 1.6% loss, gold faced pressure from a strong dollar and rising Treasury yields.

Fixed income:

• Treasuries dipped as yields peaked after Fed Chair Powell’s remarks reduced expectations for more than one rate cut this year. Powell's comments during the FOMC's decision, despite two governors dissenting for a cut, reduced anticipation for September action. Short-term rates led the rise, partly due to a stronger-than-expected Q2 GDP print. Swaps ceased to fully price in an October cut, with September odds dropping to 44% from 64%. Waller and Bowman dissented, marking the first such occurrence by central bank governors since 1993. Futures hint at weakness in Japanese bonds as the Bank of Japan likely holds rates at 0.5% and raises its inflation forecast.

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