Global Market Quick Take: Asia – June 26, 2025

Key points:

• Macro: Powell remains cautions on rates; Trump mulling to speed up replacing Fed chair
• Equities: Nvidia hit all-time high; Tesla fell 5% on weak European sales
• FX: Dollar continues to weaken against most of the currencies
• Commodities: Oil prices rose after US crude stockpiles saw a significant decline
• Fixed income: Yield curve steepened as 2 to 5 year Treasuries outperformed long end

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Powell said stagflation isn't the current scenario for the Fed. He noted a potential inflation shock requires careful handling, as inflation exceeds the 2% target. Powell stressed cautious policy to avoid long-term economic costs, without committing to a firm inflation outlook.
• Trump could speed up naming Jerome Powell's successor as Fed Chair due to frustration with slow interest rate cuts, the Wall Street Journal reported Wednesday.
• US new single-family home sales fell by 13.7% in May 2025 to 623,000 units, reversing April's 9.6% rise. This was below the expected 700,000 units, the sharpest drop since June 2022, as higher mortgage rates and economic uncertainty led households to delay buying.
• The average interest rate for 30-year fixed-rate mortgages in the US increased by 4bps to 6.88% in the week ending June 13th, according to the Mortgage Bankers Association, up from 6.84% the previous week, the lowest in six weeks.

Equities: 

• US - US stocks were mostly unchanged, keeping gains from earlier sessions as markets considered the Federal Reserve's policy outlook amid easing Middle East tensions. The Nasdaq 100 reached a record high, while the Dow fell by 100 points. Fed Chair Powell highlighted the need for more economic clarity before rate cuts, hinting at possible policy easing if tariffs are less severe than expected. Energy prices remained low as Middle East tankers navigated freely. Tech stocks led gains, with Nvidia, Alphabet, and AMD up over 2%. Tesla dropped 5% due to weak European sales, and FedEx fell 2% after cutting its guidance. Nvidia hit a record high. Its market capitalisation has grown by nearly $1.5 trillion since April, reaching about $3.77 trillion, overtaking Microsoft Corp.
• EU - DAX fell 0.6% to 23,508 on Wednesday amid cautious European market sentiment. The Iran-Israel ceasefire remains fragile despite US intervention. NATO agreed to raise defence spending targets to 5% of GDP by 2035. Commerzbank dropped nearly 6%, leading declines, while Rheinmetall (+3.1%), Heidelberg Materials (+1.8%), and Siemens Energy (+1.4%) were top gainers.
• HK - HSI rose 1.2%, to 24,475 on Wednesday, its highest in over three months. Beijing unveiled guidelines to boost consumption, supporting jobs and incomes. Premier Li Qiang is confident in rapid growth and a shift to a consumer-driven economy. Notable performers included JD Logistics (up 6.7%), SMIC (up 6.4%), Henderson Land (up 4.7%), and Longfor Group (up 3.7%). BYD cancelled night shifts and cut production at some factories by a third, suspending plans for new production lines.

Earnings this week:

• Thursday: Walgreens Boots Alliance (WBA), Nike (NKE), American Outdoor Brands (AOUT)

FX:

• Dollar index fell for the third day, with the US dollar weakening against most major currencies. Fed Chair Powell reiterated his previous comments, describing interest rates as slightly restrictive. DXY fell below 97.5.
• In the G10 currency, most currencies strengthened against the dollar, except JPY and NOK. NZD, EUR, and GBP led gains, while AUD was capped by a softer CPI report. The NATO summit saw President Trump criticise Spain for not meeting defence spending targets. EURUSD reached session highs of 1.1660, and GBPUSD hit 1.3690.
• Economic calendar – Germany GfK Consumer Confidence, Boe Gov Bailey Speech, US Durable Goods Orders, US GDP Growth Rate, US Initial Jobless Claims, ECB President Lagarde Speech

Commodities:

• Oil prices rose as President Trump reaffirmed his strategy against Iranian oil, while US crude stockpiles fell significantly. WTI futures topped $65 a barrel, and Brent closed near $68. US inventories dropped by 5.84 million barrels to an 11-year seasonal low.
• Gold steadied amid a Middle East truce and Fed Chair Powell's remarks. Trump announced a US-Iran meeting but doubted a diplomatic deal, citing damage to Iran's nuclear sites. Spot gold rose 0.3% to $3,333, with silver and platinum up, and palladium down.

Fixed income:

• Treasuries closed with minor fluctuations and a steeper yield curve following a subdued session. The 5-year note auction results and comments from Fed Chair Powell bolstered intermediate sectors, widening the 5s30s spread. Treasuries outperformed swaps as the Federal Reserve unveiled plans to reform the supplementary leverage ratio for large banks, leading to less inverted swap spreads. Additionally, 2- to 5-year yields fell by 2bp-3bp, outperforming longer-dated maturities.

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