Trade, trade, trade plus busy macro week amid end-of-month flows and continued corp EPS

General trend

- With the August 1st US trade deadline approaching on Friday, focus is on remaining trade deals. Today EC Pres von der Leyen broke the suspense for Europe, meeting with Pres Trump in Scotland to announce the biggest trade deal so far. Bottom line is a Japan-like 15% EU tariff into the US (less than the 30% recently threatened by Trump), but zero tariffs on US into EU, plus $750B EU purchases of US energy within three years, with an additional $600B EU investment into the US. The 15% tariff includes autos and brand pharmaceuticals, but steel and aluminum remain at 50% for now. For now, there are also some carve-outs for certain strategic goods such as semiconductors, aircraft + parts, certain generic drugs and chemicals and some agricultural products. [** Note: US is still to announce the results of its Section 232 trade investigations in two weeks.]

- Muted, though positive reaction initially on FX, with the Euro +0.2% soon after the open, but falling back to flat as the session continued. US equity FUTs more enthusiastic, jumping +0.4% at the futures open, with the NASDAQ, S&P, Dow and UK FTSE FUTs also hitting fresh record highs. DAX +0.9% (though not a record high).

- It was a different story for the Nikkei, which initially opened up 0.2% but then fell like a stone, to be down -0.9% within 10 minutes post-open. Japan perhaps not helped by European chip-relateds (for now) getting off scot-free with an exemption on the 15% tariff rate for the EU, while Japan chip-relateds received no such exemption on Japan’s 15% tariff rate. Tokyo Electron -3.3%, Advantest -8%.

- The EU deal perhaps has given the Trump Admin room to keep the door open for longer with China, with press reports that US and China will likely prolong the current hold on current tariff rates for a further three months. Comes ahead of US Treas Sec Bessent meeting Chinese counterparts in Stockholm, Sweden on Mon and Tues, July 28-29th. (China deal to otherwise expire on Aug 12th). Separately, reports today that US Pres Trump said to freeze export controls in order to secure trade deal with China.

- No outsized reaction in CN/HK markets from the US-China pause speculation. Shanghai +0.1%, Hang Seng +0.5%. Meanwhile, CK Hutchison confirmed that the period for exclusive talks with the Blackrock consortium has expired and it may invite a China investor to join the Ports deal. (Reminder that Blackrock 10 days ago also dropped out of the consortium bidding for US TikTok).

- Vietnam stocks hit a fresh record high, while Taiwan’s stock market slightly up to hit its highest level since Feb 2025.

- Major US trade deals still to be struck with South Korea, Taiwan (plus Mexico & Canada) and several other Asian nations. Over 100 smaller nations look to be receiving a letter later this week from the US simply informing them of the rate they will each be paying on their US-bound exports moving forward.

- The devil will be in the detail on the various trade deals, with further reports that Japanese officials have a different interpretation of the US-Japan trade deal struck last week, particularly how the $550B of Japanese investment into the US will be implemented and shared. Japan appears to be claiming that “Deals funded by Japan would be based on the degree of contribution and risk taken by each party”, quite different to Commerce Sec Lutnick's claim that US would simply get 90% and Japan 10% of profits. Japan’s top negotiator Akazawa also said to only expect 1-2% of the $550B to be investment, with the remainder being loans upon which Japan will actually earn interest on.

- Outside of trade, this is also a big week for data, book-ended by US Non-farm Payrolls on Friday, but also keenly awaited US Core PCE for June and US Q2 GDP figures after import-frontloading saw Q1 GDP record a negative print. EU Q2 GDP and July CPI comes out as well as China’s Manufacturing PMIs amid the high US tariffs.

- US Fed and JP BOJ rate decisions also awaited this week.

- Down Under, Australia June & Q2 CPI numbers due this week.

- The Thailand-Cambodia border conflict may ease in the short term with some prompting from an unlikely source; US Pres Trump said that he told the leaders of both countries that he would not conclude trade deals with them unless they ended their fighting. Believes they both want to settle their differences now. Both sides to meet in Malaysia for peace talks.

- Taiwan’s Pres Lai’s minority govt (in the legislature) failed to unseat any of the opposition party members seen by the DPP as “too close” to China’s CCPs. Lai’s DPP did not outwardly support the voter-led recall effort, which was hoping to flip the balance of power in the legislature back to Lai’s DPP party. Official results are expected by August 1st, but some Taiwanese political commentators suggest that holding onto the legislature may enable the opposition KMT/TPP coalition to ‘invite’ the CCP into Taiwan, similar to what unfolded in Hong Kong from 2018.

- Tesla will not be feeling content with its extensive efforts to receive FSD/Robotaxi approval in China thus far, as it was conspicuously absent from reports that Pony.ai along with Baidu, SAIC Motor, Dazhong Transportation (but NOT Tesla) were among the first to receive permits for Fully Driverless Commercial Robotaxi Services in Shanghai’s Pudong New Area.

- However, Tesla IS looking more like a full stack chip-designer/maker in addition to an AI-powered car & robot maker as it inks a $16.8B multi-year chip deal with Samsung Electronics, with Musk saying that Samsung's "giant new Texas fab" will be dedicated to making Tesla's next-gen AI6 chip. (Taiwan Semi will make the AI5, which just finished design). Musk also said Samsung agreed to Tesla and Musk himself to “personally walk the line and accelerate the pace of progress”.

- Samsung +5.8%, while Korean competitor SK Hynix -2%.

- US DOGE work continues without Elon Musk as it reportedly utilizes an AI tool to cut up to 50% of federal regulations. Supposedly 100,000 federal regulations could be eliminated, potentially saving billions of dollars with aim of creating a 'delete list' by Jan 2026.

- Microsoft, Meta, Apple and Amazon of the original Mag7 all report earnings this week, amid peak US-earnings season.

- US equity FUTs +0.5% to +0.6% during Asian trading.

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

- Tue July 29th (Tue night US Jun JOLTS).

- Wed July 30th SG MAS rate decision, NZ July Biz Confidence, AU Jun + Q2 CPI, (Wed eve EU Q2 GDP, Wed night BOC rate decision, US Q2 GDP, US Fed rate decision).

- Thu July 31st JP Jun Retail Sales + Industrial Production, AU Retail Sales, CN July PMI Manufacturing, JP BOJ rate decision, JP July Consumer Confidence, (Thu night US Jun Core PCE).

- Fri Aug 1st KR July Ex/Im + PMI, AU PPI, CN Caixin July Manufacturing PMI, (Fri eve EU July CPI, Fri night US July NFP, US July ISM PMI Manufacturing).

Holidays in Asia this week

- Mon July 28th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.2% at 8,686.

- New Zealand Jun Filled Jobs M/M: +0.1% v -0.1% prior (first rise since Jan).

China/Hong Kong

- Hang Seng opens +0.3% at 25,458; Shanghai Composite opens flat at 3,594.

- Reportedly China and US likely to prolong current hold on current tariffs for another three months during talks in Sweden next week - SCMP.

- US Pres Trump said to freeze export controls in order to secure trade deal with China.

- China Jun Industrial Profits Y/Y: -4.3% v -9.1% prior [weekend update].

- Huawei unveils CloudMatrix 384 system, designed to compete against Nvidia's top AI products - World AI conf in Shanghai (update).

- China Premier Li Qiang: China to help establish an international AI collaboration group; AI should be an international public good that benefits humanity - World AI conf in Shanghai [weekend update].

- China PBOC 1-year Medium-Term Lending facility (MLF) setting: Leaves rate unchanged at 2.00%; Conducts CNY400B v CNY400B indicated; Net injects CNY100B in liquidity (update).

- China PBOC sets Yuan reference rate: 7.1467 v 7.1419 prior.

- China PBOC Open Market Operation (OMO): Injects CNY496B in 7-day reverse repos; Net injects CNY325B v injects CNY602B prior.

Japan

- Nikkei 225 opens +0.2% at 41,532.

- Japan Chief Cabinet Sec Hayashi: US-EU and US-Japan trade deals lower uncertainty related to US trade policy.

- Japan Fin Min Kato: Reiterates need to find new buyers for additional ¥60-70T worth of JGBs to "maintain smooth issuance" amid BOJ bond tapering - financial press.

- Japan ruling coalition's senior party LDP said to have collected sufficient signatures to call meeting to decide fate of PM Ishiba - Jiji (update).

- BOJ may paint less gloomy view, signal rate-hike resumption [inline, refers to the upcoming rate decision on Jul 31st (Thurs)]; cites analysts - financial press.

- BOJ Outright Bond Purchase Operation for 5~10 Years; 10~25 Years; >25 Years maturities and inflation-indexed bonds; (Leaves purchase amounts unchanged).

- Japan officials have different interpretation of US trade deal's joint investments than White House – FT [weekend update].

- China protests Japan's hosting of Taiwan Foreign Minister [weekend update].

Korea

- Kospi opens +0.9% at 3,225.

- Follow up: South Korea reportedly offered “tens of billions” of dollars’ worth of shipbuilding projects in the US-Korea trade talks – Yonhap.

- South Korea Financial Services Commission (FSC): South Korean financial firms pledge investment in 'productive sectors' - statement.

Other Asia

- Thailand Acting PM Phumtham: US, China and Malaysia have all reached out to help on border conflict with Cambodia; They don't want to see violence - financial press.

- (TH) US Pres Trump: Both Thailand and Cambodia want to settle their differences; Update: Thailand, Cambodia agree to negotiate ceasefire in Malaysia - financial press (update).

- (TW) Taiwan opposition party defeats recall election effort, in a blow to the ruling party - press.

- Thailand Acting PM Phumtham: Thailand accuses Cambodia of war crimes.

- Malaysia Central Bank (BNM): Cuts 2025 GDP growth forecast from 4.5-5.5% to 4.0-4.8% ; Cuts avg headline inflation from 2.0-3.5% to 1.5-2.3%.

North America

- Comcast: (US) Trump: Comcast's NBC is an arm of the Democrat Party...their licenses could, and should, be revoked! - Truth Social.

- (US) DOGE is utilizing an AI tool in effort to cut 50% of federal regulations – press.

- May Trucking Conditions Index (TCI) +3.56 v -0.81 m/m - FTRintel.com.

Europe

- (EU) Senior EU Official (unnamed): Confirms EU agreed to open markets to US for 'all but a few products' - financial press.

- (IL) Yemen's Houthis reportedly say will target any ships that belong to companies that deal with Israeli ports, regardless of nationality - financial press.

- (UK) PM Starmer confirmed to meet US Pres Trump in Scotland on Mon; Topics include US-UK trade deal, Middle East, Pressuring Putin to end Ukraine war.

- (EU) US-EU agree to major trade deal; 15% tariff on most EU goods into US, EU open to US at zero tariffs; EU to also purchase $750B of US energy and invest additional $600b into US; EU to also buy US military equipment; Steel, Alum remain at 50%.

- (EU) ECB’s Cipollone (Italy): Economy is sending conflicting signals; Need to see how trade will affect.

Levels as of 01:20 ET

- Nikkei 225 -1.0%, ASX 200 +0.3%, Hang Seng +0.5%; Shanghai Composite +0.1%; Kospi +0.4%.

- Equity S&P500 Futures +0.5%; Nasdaq100 +0.6%; DAX +1.1%; FTSE100 +0.5%.

- EUR 1.1742-1.1771; JPY 147.52-148.02; AUD 0.6562-0.6586; NZD 0.6007-6033.

- Gold +0.1% at $3,395/oz; BTC +1.0% at $119,520; Crude Oil +0.7% at $65.59/bbl; Copper -0.2% at $5.7715/lb.