RBA Minutes affirms 6-3 split

Asia market update: JP takes elections in stride, for now; RBA Minutes affirms 6-3 split; Trade talks continue; US crypto/finance meld further.

General trend

- Japanese cash markets reopened marginally positive after the narrow election loss of the Upper House by the LDP-Komeito ruling coalition. Markets may have appreciated PM Ishiba signaling his intent to stay on amid fiscal concerns around opposition parties’ spending plans and tax cut desires. Nikkei initially +0.6%, with JGB yields lower at the front end and belly of the curve, but higher at the long-end of the curve, with Japan’s recently troublesome 40-year JGB auction being tomorrow. (Prior 40-yr auction end-May saw the weakest demand ratio since July 2024. Today’s JP 40-yr yields +3bps).

- The Nikkei proceeded to pare initial opening gains, and for the second time in a few days failed to hold onto the 40K handle within the first hour of trading. Kept falling to be down -0.5% late session.

- Korea's Kospi, close to all-time-highs, underperformed Asia -1.8%.

- Some Japanese political analysts believe a probable outcome of the LDP-Komeito coalition falling (slightly) short of an outright ruling majority will be for it to seek cooperation with opposition parties on a policy-by-policy basis, rather than forming a new formal coalition government.

- Australia RBA’s Minutes showed that a majority felt prudent to await confirmation on inflation before easing. Three out of nine members confirmed to oppose the pause (which was unexpected by the markets), believing to already have sufficient evidence inflation was on track. However, a majority of members felt cutting rates three times in four meetings would not be 'cautious and gradual'.

- New Zealand managed to eke out another trade balance surplus for June. Notably EV imports fell 57% y/y (NZ last year eliminated EV mandates and subsidies), but hybrids managed a small gain y/y/.

- US-China trade tensions may heat up again with China's COSCO said to eye veto rights in the CK Hutchison ports deal (and thus Panama ports deal). CK Hutchison +3%.

- India press reporting that an India-US trade deal unlikely prior to Sept/Oct.

- Malaysia has been asked by the US to extend tax exemptions for US EVs.

- Apparent concrete returns for US companies out of last week’s Indonesia trade deal, with US Industrial KBR Inc reportedly planning to sign an $8B deal with Indonesia Wealth Fund Danantara to build 17 modular oil refineries.

- US Treasury Sec Bessent continued the theme of calling for banking reform, including reduced capital requirements and a more modern capital regime for regional banks along with less burdensome regulations.

- Japanese large utilities companies such as KEPCO and TEPCO +4-5% on the late Friday news that Kepco considering Fukui Prefecture for a new nuclear plant - which would be the first for Japan since the Fukushima nuclear plant tsunami disaster in March, 2011.

- Thailand at last confirmed its new Central Bank Governor, Vitai Ratanakorn, effective Oct 1st, 2025.

- US crypto sector continues to meld with mainstream finance following the GENIUS Act's passing last week, with JPMorgan said to be considering lending against its clients' cryptocurrency.

- WTI Crude continued to weaken, -1.0%.

- US equity FUTs -0.1% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Tue July 22nd (Tue night US Fed Chair Powell speech).

- Wed July 23rd KR Jun Consumer Confidence, BOJ Uchida speech, US (Wed night US Jun Existing Home Sales).

- Thu July 24th KR July Business Confidence, KR Q2 GDP, Global Flash PMIs, (Thu eve ECB rate decision).

- Fri July 17th (Fri night US Jun Durable Goods).

Holidays in Asia this week

- Mon July 21st Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.3 % at 8,697.

- Australia RBA July minutes: Majority felt prudent to await confirmation on inflation before easing.

- Australia Debt Agency (AOFM): Confirms launch of new Oct 2036 bond through syndication.

- New Zealand Jun Trade Balance (NZD): 142M v 1.2B prior.

China/Hong Kong

- Hang Seng opens +0.1% at 25,024; Shanghai Composite opens +0.1% at 3,561.

- 1.HK: Follow up: China's COSCO said to eye veto rights in Li Ka-Shing (CK Hutchison) ports deal (and thus Panama ports deal) - financial press.

- Hong Kong equities 'waver' as investors eye China Politburo meeting which is expected to be held at the end of July - SCMP.

- China Human Resources Ministry: 6.95M urban jobs created in H1; Completes 58% of annual job creation target - China state media.

- China PBOC to push interest rate reform to lower banks' funding costs - Press.

- (CN) US House Lawmakers ask Microsoft, Google, Meta, and Amazon CEOs if they have adequate safeguards to address concerns about China and Russia targeting submarine cables.

- China Premier Li Qiang said to sign decree on housing rental sector.

- China Foreign Ministry Official Guo: EU is exaggerating economic and trade issues.

- Hong Kong Jun CPI Composite Y/Y: 1.4% v 1.7%e [overnight update].

- China PBOC sets Yuan reference rate: 7.1460 v 7.1522 prior.

- China PBOC Open Market Operation (OMO): Injects CNY215B in 7-day reverse repos; Net drains CNY128B v drains CNY56B prior.

Japan

- Nikkei 225 reopens +0.2% at 39,892.

- Japan Fin Min Kato: Reiterates government sees consumption tax cut as not appropriate.

- Follow Up: Japan Trade Negotiator Akazawa and US Commerce Sec Lutnick met for >2 hours on Mon in Washington DC – Press.

- With regards to recent Japan Upper House elections, BOJ said to be most concerned about how govt's focus on economic policy could change, and how markets could react; cites source familiar with the central bank's thinking - financial press.

- US Treas Sec Bessent; Regarding Japan-US trade deal: Our priorities aren't (domestic Japanese govt), but best (trade) deals for US [overnight update].

Korea

- Kospi opens flat at 3,210.

- South Korea Jun PPI Y/Y: 0.5% v 0.3% prior.

- South Korea Fin Min Koo: With Trade and Industry Ministers will hold trade talks with US counterpart on July 25th - financial press.

Other Asia

- Malaysia Jun CPI Y/Y: 1.1% v 1.2%e (11th month below target range).

- (IN) Follow up: India, US "mini" trade deal said to be ruled out before Aug 1st - India press.

- Singapore MAS to release quarterly Monetary Policy Statement July 30th.

- Malaysia has been asked by the US to extend tax exemptions for US EVs - Press.

- Thailand Cabinet endorses Vitai Ratanakorn as new Bank of Thailand (BOT) Gov; Effective Oct 1st - financial press.

North America

- KBR reportedly plans to sign $8B deal with Indonesia Wealth Fund Danantara to build 17 modular oil refineries.

- Brazilian Pres Lula: We're not in a tariff war; There will be a tariff war if Trump does not change his opinion.

- (US) Treasury Sec Bessent: Deeper reforms of banking regulatory structure are needed.

- OPENAI.IPO Said to be in contention with SoftBank over Stargate AI Ohio based project; Aims for a more modest plan of building a small data center by the end of 2025 - WSJ.

- Canada International Trade Min Leblanc to come to Washington for trade discussions this week.

- (US) Treasury Sec Bessent: Trade talks are moving along, but focus has to be on quality, not timing, of any deals; Will be engaging with China in near future, reiterates China talks in good place - CNBC.

- (BR) Brazil Fin Min Haddad: Cannot rule out possibility that will not have a response from US on trade proposal by Aug 1st.

- (US) JUN LEADING INDEX: -0.3% V -0.3%E.

- (US) Rep Luna (R-FL) refers Fed Chair Powell to DOJ for criminal charges on allegations that he lied under oath about Fed renovations - Fox News.

- White House Press Sec Leavitt: Reiterates that Trump has no plans to fire Fed Chair Powell; Reiterates that Fed Chair needs to lower interest rates; Could see more tariff letters before Aug 1st.

Europe

- (UK) Govt launches early review of state pension age amid retirement concerns - Sky News (current age 66).

- (EU) Said to consider wider set of potential countermeasures against US tariffs; Still prioritizing a negotiated solution - press.

- (IL) Israel Central Bank (BOI) July Minutes: Decision to keep policy steady was unanimous (6-0).

- (IN) India Jun Eight Infrastructure (Key) Industries: 1.7% v 1.2% prior.

Levels as of 01:20 ET

- Nikkei 225 -0.3%, ASX 200 flat, Hang Seng +0.4%; Shanghai Composite +0.6%; Kospi -1.8%.

- Equity S&P500 Futures -0.1%; Nasdaq100 -0.1%; DAX -0.4%; FTSE100 flat.

- EUR 1.1683-1.1698; JPY 147.25-147.73; AUD 0.6514-0.6531; NZD 0.5955-5975.

- Gold -0.2% at $3,400/oz; BTC -0.9% at 117,290; Crude Oil -1.0% at $65.32/bbl; Copper -0.9% at $5.5905/lb.