Global Market Quick Take: Asia – June 27, 2025

Global Market Quick Take: Asia – June 27, 2025

Key points:

• Macro: US economy contracts by 0.5% in Q1
• Equities:  SP500 approaching new highs
• FX: USD weakened; G10 currencies strengthened; EURUSD 1.17; GBPUSD 1.37
• Commodities: Platinum over decade level high
• Fixed income: Yields fall due to expectations of dovish policy

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• The US economy contracted by 0.5% in Q1 2025, the first decline in three years, driven by reduced consumer spending and exports. Consumer spending rose 0.5%, the slowest since 2020, and exports grew 0.4%.
• According to Reuters, Trump announced signing a deal with China on Wednesday and mentioned a potential upcoming deal with India, adding that China is beginning to open up.
• Core consumer prices in Tokyo's Ku-area increased by 3.1% in June 2025, down from 3.6% in May and below the expected 3.3%. This is the first slowdown since February, but still above the Bank of Japan's 2% target.
• Japan's retail sales grew by 2.2% in May 2025, below the expected 2.7% and slower than April's revised 3.5%. This marked the 38th consecutive month of growth, supported by rising wages.
• Japan's unemployment rate remained at 2.5% in May 2025 for the third month, meeting expectations. Unemployment dropped by 40,000 to 1.72 million, while employment increased by 33,000 to a record 68.37 million.

Equities:

• US - The S&P 500 surged nearly $10 trillion, briefly topping its February peak before closing at 6,141.02, led by big tech gains. Banks climbed as an analyst declared it's "game on" without a recession. The VIX fell to 16.59 from April's peak of 52. Investors are moving into speculative stocks, with the Invesco S&P 500 High Beta ETF on track for its best quarter since 2020 against the Low Volatility ETF. The equal-weighted S&P 500 is 4% below its November record. Nike's sales exceeded expectations, showing recovery. Coinbase shares hit a record high amid growing crypto acceptance. JPMorgan and Goldman Sachs reached new highs after the Fed's plan to ease a key leverage ratio.
• JP - Japanese stocks rose, tracking Wall Street's gains. The Nikkei exceeded 40,000 for the first time since January. The Topix Index was up 0.8% to 2,826.15, and the Nikkei gained 1.1% to 40,001.55. Hitachi Ltd. boosted the Topix Index with a 2.4% increase. 
• EU - DAX rose 0.6% to 23,649, outperforming European peers amid Israel-Iran ceasefire developments and NATO's defence spending pledge. Record public investment plans boosted sentiment, despite a dip in the GfK Consumer Climate Indicator. Defence stocks surged, with Rheinmetall up 7.3%, while banks and pharma stocks gained. Conversely, retailers like Adidas and automakers such as Volkswagen lagged behind.
• HK - HSI dropped 0.4% to 24,371, ending a four-day rally as traders took profits after reaching a three-month high. Losses were led by property, financial, and consumer stocks, including Henderson Land and Mixue Group. Meanwhile, China's Premier Li expressed optimism about growth and a consumption-led economy. The tech index rose, supported by Nvidia's record-setting gains.

FX:

• USD weakened as Treasury yields firmed on reports of Trump's expedited Fed Chair successor. Despite data and Fed commentary, sentiment stayed unchanged. Q1 PCE exceeded expectations, GDP fell, jobless claims dropped, and durable goods surged, impacting trade balance.
• G10 currencies rose as the Dollar weakened, EURUSD traded near 1.17. The EU may reduce US tariffs, while BoE's Bailey supports gradual monetary easing. GBPUSD strengthened to above 1.37.
• Safe-haven currencies CHF and JPY rose on speculation of a dovish Fed shift with Powell's successor. CHF stayed strong despite selling, expecting US tariffs at 10% post-July 9th. JPY strength was limited by US tariff talks.
• Economic calendar – France Inflation Rate, EU Economic Sentiment, US PCE Price Index, US Personal Income, US Personal Spending

Commodities:

• Oil remained stable as focus shifted from Middle East tensions to US tariff talks and possible easing of Iran sanctions. WTI traded near $65, and Brent around $68. The US and China finalised a trade deal, while the US considered easing Iran sanctions.
• Gold aimed for a second weekly loss, falling to $3,315 an ounce due to an Israel-Iran ceasefire, down 1.5% for the week. Platinum rose after hitting its highest level in over a decade on Thursday.

Fixed income:

• Treasuries extended gains during the US afternoon session as a $44 billion 7-year note auction attracted strong interest, slightly surpassing the WI level with a robust indirect bid. The front-end and belly outperformed, steepening the curve amid expectations of a more dovish Fed policy. The 5s30s spread neared 103bp, its steepest since 2021, and in the bull steepening move.

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