Markets tread water, with some nervousness between trade deals and upcoming key data

Asia Market Update: Markets tread water, with some nervousness between trade deals and upcoming key data, plus US Fed & BOJ decisions along with corporate earnings and month-end flows; US Jun JOLTS tonight.

General trend

- Tight lips from US-China after Day 1 of the latest round of trade talks in Stockholm overnight, with no news of progress. Day 2 to continue today (Tue, July 29th). Trump Admin perhaps not wanting to rock the boat during negotiations with Taiwan Pres Lai reportedly having to delay making a planned US stopover in New York during August. [Story later denied by Taiwan].

- With the exception of the Kospi, slightly up, Asian stocks drifted lower, with the Nikkei and Hang Seng underperforming -1.0%.

- Euro lost two Big Figures overnight, as the initial welcoming of the clarity of a EU-US trade deal turned to disappointment at the perceived lopsideness and cost of the deal for EU moving forward, with further borrowing likely needed by the bloc.

- Some beneficial real-world tariff outcomes reported for the US out of Asia today, with Suntory’s CEO saying the company can absorb US tariffs for its whisky exports, while Korean biosimilar Celltrion acquired a local production facility owned by a pharma company in the US in order to relieve tariff risks. Suntory comments are noteworthy as back in April the CEO said that US tariffs are “really concerning” and that “Japanese companies may lose US investment appetite”.

- Australian press reporting that Pres Trump said to be warning Australia that its baseline tariff "could double" (currently at the minimum of 10%). [Note that neither PM Albanese nor US Ambassador Rudd have been reported as having yet met with Trump].

- Meanwhile a majority of Japan voters think PM Ishiba should remain in office, somewhat of a turnaround for the embattled Prime Minister.

- 2-year Japan JGB auction was well supported, higher than the 12 month average coverage ratio and highest since October 2024. 2-year yields fell 2bps to 0.82% post-auction.

- South Korea delegation heads to US to meet with US Treas Sec Bessent and team for delayed US trade talks.

- US Pres Trump confirmed a Thailand-Cambodia ceasefire. Peace talks in Malaysia came after Trump yesterday told the leaders of both countries that he would not conclude trade deals with them unless they ended their fighting. Thailand says its US trade talks to resume.

- US equity FUTs +0.2% to +0.3% 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 -0.5% at 8,652.

- US Pres Trump said to warn Australia that its baseline tariff (currently 10%) "could double" - Australia press.

- Australia sells A$1.0B v A$1.0B indicated in 2.25% May 2028 Bonds: Avg Yield: 3.4184% v 3.3071% prior; bid-to-cover 3.33x v 3.96x prior.

- BNZ: New Zealand Jun Job Ads M/M: -2.6% v -2.1% prior.

China/Hong Kong

- Hang Seng opens -0.4% at 25,454; Shanghai Composite opens -0.1% at 3,595.

- (US) Pres Trump: The Fake News is reporting that I am SEEKING a “Summit” with President Xi of China. This is not correct; I will only go under invitation - post on Truth Social.

- Shanghai Securities News affirms during H2 China to focus on domestic demand and 'anti-involution'.

- US and China delegations complete first day of trade talks in Stockholm, will resume tomorrow (07/29) [overnight update].

- (CN) Chongqing Changan Auto restructured today as "independent" state-owned automaker, owned by China central govt - China media.

- Hong Kong Jun Trade Balance (HKD): -58.9B v -59.0Be [overnight update].

- China PBOC sets Yuan reference rate: 7.1511 v 7.1467 prior.

- China PBOC Open Market Operation (OMO): Injects CNY449B in 7-day reverse repos; Net injects CNY234B v injects CNY325B prior.

Japan

- Nikkei 225 opens -0.6% at 40,755.

- Japan sells ¥2.6T VS. ¥2.6T indicated in 2-year JGB bonds; AVG yield: 0.8410% V 0.7290% prior; BID-to-cover: 4.47X V 3.90X (vs 12-month avg 3.99x and highest since Oct 2024).

- Japan Fin Min Kato: Sales tax is vital for social security system in Japan; Important for Japan to seek US Exec Order in relation to tariffs.

- Former BOJ Dep Gov Nakaso: Dollar to retain supremacy as key global currency, but 'cracks' appearing as investors diversity into other currencies - financial press.

- Japan Economy Min Muto: Urges US to 'swiftly' cut tariffs, regarding Aug 1st deadline.

- Suntory CEO: Co can absorb US tariffs for whisky exports - financial press.

- Majority of Japan voters think PM Ishiba should remain in office - Nikkei poll conducted between Fri and Sun [update].

Korea

- Kospi opens -0.5% at 3,192.

- South Korea Fin Min Koo Yun-cheol: To do best in the US to 'derive the best trade agreement' - financial press.

- South Korea Unification Min: Will support restarting US and North Korea summit.

- Celltrion: Becomes preferred bidder at KRW700B for a local production facility owned by a pharma company in the US, in order to relieve US tariff risks - financial press.

Other Asia

- (MM) Trump Administration said to hear competing proposals on Myanmar policy shift - financial press.

- (TH) US Pres Trump: Confirms Thailand-Cambodia ceasefire - Truth Social post.

- (TW) Follow up: Taiwan disputes media stories, says Pres Lai has No travel plans in the near-term - financial press.

- (TW) Reportedly Trump Admin blocked Taiwan Pres Lai from making planned US stopover in New York in Aug - press.

- (TW) US Senators said to be planning bill supporting Taiwan against China human rights abuses – press.

- Taiwan Jun Monitoring Leading Indicator: 29 v 31 prior.

- Philippines Central Bank (BSP) Gov Remolona: Reiterates on track for two more rate cuts this year; Timing remains data dependent.

- Indonesia Central Bank (BI) Gov Warjiyo: Looking for room to further lower rates.

- India Jun Industrial Production Y/Y: 1.5% v 2.2%e.

North America

- US NHC on Hurricane Iona: Expected to become major hurricane on Tuesday; First hurricane of 2025 for the Central Pacific.

- Nvidia said to have ordered 300K H20 chips from TSM last week - financial press.

- (US) Follow Up: America's growing copper crisis finds a 'promising' solution in the backyard of Arizona; the Ivanhoe Electric Santa Cruz Project is expected to begin operations by 2028 - Fox News [update].

- (US) Commerce Sec Lutnick: Trump will mull a few deals this week and then set tariff rates; Confirms the EU to pay 15% tariff except for 'a few little things'; confirms Trump to set tariffs for other nations by the end of the week.

- (US) USTR Greer: EU will accept some aspects of US auto standards; Want to keep working on steel sector; Digital services taxes also area to keep working on; Regarding China, don't expect big breakthrough today - CNBC.

- (MX) Mexico Jun Unemployment Rate: 2.7% v 2.8% prior.

- (US) July DALLAS Fed Manufacturing activity: +0.9 V -9.5E.

- (UR) Pres Trump on geopolitics: Making new deadline with Russia for 10-12 days, We see no progress being made, 'no reason in waiting' (original was to expire Sept 2nd); Will confirm new deadline or tonight or tomorrow; Reiterates plan to use secondary sanctions in absence of Ukraine-Russia peace deal.

- (US) Pres Trump: World tariff would be somewhere between 15-20% range.

- (CL) Chile Fin Min Marcel: Expect copper tariff exemption; Chile won't retaliate against US tariffs - Chilean press.

- (US) Treasury $69B 2-year note auction draws 3.920% V 3.786% prior; bid-to-cover ratio: 2.62 V 2.58 prior and 2.64 over the last 12 auctions.

- (US) Treasury $70B 5-year note auction draws 3.983% V 3.879% PRIOR, BTC 2.31 V 2.36 prior and 2.39 over the last 12 auctions.

- (US) Treasury quarterly financing estimates: To borrow $1.007t in July-Sep quarter v $980BE and $554B prior estimate; Oct-Dec to borrow $590B V $650BE.

- (US) Reportedly Trump Admin considers overhaul of the patent system to raise revenue; Patent holders would be charged 1-5% of overall patent value - press.

Europe

- (EU) Commission Pres Von der Leyen accused by ECB staff of 'unaccountable legal fortress" - FT.

- UBS said to have ordered its bankers to 'scale back' sale of complex FX products - FT.

- Saudi Arabia: Will not normalize Israel relations without establishment of Palestinian state - financial press.

- (UK) July BRC Shop Price Index Y/Y: 0.7% v 0.4% prior.

- (EU) ECB's Kazimir (acting Slovakia member): Major hit to labor market could force ECB action.

- (DE) Germany Econ Min Reiche: The will be a need for adaption for some sectors following EU-US trade deal.

- (EU) European Commission clarifies that the $600 billion investment pledge under the EU-US trade deal is simply an "intention", not a "guarantee."

- (UK) July CBI Retailing Reported Sales: -34 v -46 prior.

- (IE) Ireland Q2 Preliminary GDP Q/Q: -1.0% v +7.4% prior; Y/Y: 12.5% v 20.0% prior.

- (TW) China mission to EU: China opposes any official exchanges between European Parliament and Taiwanese authorities.

- (DE) Germany reportedly to double defense spending to €162B by 2029 - press.

- OPEC+ JMMC meeting ends with no policy recommendation.

Levels as of 01:20 ET

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

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.3%; DAX +0.2%; FTSE100 flat.

- EUR 1.1574-1.1599; JPY 148.24-148.71; AUD 0.6512-0.6531; NZD 0.5962-5977.

- Gold +0.1% at $3,370/oz; BTC -0.7% at $118,810; Crude Oil -0.2% at $66.58/bbl; Copper -0.6% at $5.5880/lb.