EU/UR/RU strike a hopeful tone as Trump plays mediator

Asia market update: EU/UR/RU strike a hopeful tone as Trump plays mediator; CN/HK equities positive as rest of Asia down; Markets tread ahead of Fed's Jackson Hole.

General trend

- A gaggle of EU leaders chaperoned Ukraine's Zelenskiy to Washington to meet with Pres Trump today, with on overall optimistic tone about the chance to reach a peace deal but recognition that the hard work still lies ahead. Trump reportedly called Putin to relay outcomes during the day, underscoring his mediator-in-chief status at present. (German Chancellor Merz later said Putin had agreed to a summit with the Zelenskiy following a phone call with Trump).

- Further corporate earnings out of Australia as the ASX underperformed following a series of fresh record highs over the last week. Miner BHP +1.6% as it affirmed targets. Australia August Westpac Consumer Confidence rose sharply to a 3.5-year high, with the bank commenting that a long period of pessimism for Australian consumers is ending. Large Aussie Pharma CSL Ltd -16% amid demerger plans for CSL Securus into a standalone ASX listed co.

- Softbank opened +1.5%, but then collapsed -5.4% (later paring losses to -3%) as overnight it entered a strategic investment to buy $2.0B of Intel stock (87M shares) at $23.00/shr (slightly below last close of 23.66/shr). At ~2% Softbank will become the 6th biggest holder in Intel “for advanced technology and chip innovation in the US”. News came after US govt said to be considering taking a 10% stake in the US chipmaker. INTC after-hours +5.8%.

- Nikkei opened up slightly, but quickly fell in tandem with Softbank’s volatility. Again a narrower tail for Japan's 20-year JGB auction today, but the bid-to-cover ratio was below the 12-month average).

- Only the Shanghai Composite and Hang Seng indices positive today, amid quiet trading with eyes on Jackson Hole later in the week and any clues to Fed policy for September's rate decision.

- HK$ strengthened back above the 7.80 midpoint of 7.75-7.85 trading range. Of note the past few days has been the abrupt easing of pressure on the HKD being pressed up against the 7.85 weak end of the USD/HKD peg ceiling for nearly two months. Back down to 7.80 level MID-POINT now. [Note: Up through Aug 13th HKMA intervened 11 times, purchasing HK$116.5B or selling US$14.8B, draining liquidity and reducing aggregate balance by 67% since the May highs (now just at HK$53.7B, not too far above the 2008 lows of HK$45.5B), causing HIBOR rates to spike in August (overnight HIBOR had been trading at record lows just above 0%), helping to unwind HK$ carry trades. A weaker USD outlook and increased anticipation of rate cuts in the US recently may also have contributed to the easing.

- S&P affirmed US Sovereign rating at AA+ and Outlook Stable, expecting the US economy to grow around 2% following a slowdown in 2025 and 2026.

- New Zealand's RBNZ rate decision tomorrow, expected to cut by another 25bps.
- US equity FUTs -0.1% to -0.2% during Asian trading

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

- Tue Aug 19th (Tue night US July Housing Starts).

- Wed 20th JP July Trade Balance, CN LPR, NZ RBNZ Rate Decision, (Wed eve UK July CPI, ID Rate Decision, Tue night US FOMC Minutes).

- Thu Aug 21st NZ Trade Balance, Global Flash PMIs, (Thu night EU Aug Consumer Confidence, US July Home Sales).

- Fri Aug 22nd JP July CPI, (Fri eve UK July Retail Sales, US Fed Chair Jackson Hole speech).

Holidays in Asia this week

- Thu Aug 21st Philippines.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.4% at 8,928.

- Australia Aug Westpac Consumer Confidence: 98.5 v 93.1 prior (3.5-year high).

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 89.4 v 89.3 prior (update).

- BHP Reports FY25 Underlying Net $10.2B v $10.2Be ($13.4B y/y), Underlying cont ops Profit $10.2B v $13.7B y/y, Underlying EBITDA $26.0B v $26.2Be ($29.6B y/y), Rev $51.3B v $55.66B y/y.

- New Zealand Q2 PPI Output: 0.6% v 2.1% prior: Input Q/Q: 0.6% v 2.9% prior.

- New Zealand Treasury: Sees economic momentum rising on impact of rate cuts.

- Reportedly China is working to reopen rapeseed trade with Australia after a five-year pause, seeking to secure supplies of a key animal feed ingredient as ties with top supplier Canada sour - press.

China/Hong Kong

- Hang Seng opens +0.3% at 25,241; Shanghai Composite opens flat at 3,728.

- HK$ strengthens back to 7.80 midpoint of 7.75-7.85 trading range.

- China rare earth CSI index +3% - press.

- US Federal court dismisses lawsuit against Texas that would restrict property ownership by China citizens - Nikkei Asia (update).

- China Premier Li Qiang: Reiterates to achieve annual economic goals; improve effectiveness of macroeconomic policy.

- Follow-up: Reportedly China publicly owned computing hubs have been asked to source more than 50% of their chips from domestic producers to cut reliance on Nvidia - SCMP (update).

- China rare earth product exports reportedly recover to 6-month high – press.

- China PBOC sets Yuan reference rate: 7.1359 v 7.1322 prior.

- China PBOC Open Market Operation (OMO): Injects CNY580B in 7-day reverse repos; Net injects CNY466B v injects CN155B prior.

Japan

- Nikkei 225 opens +0.2% at 43,813.

- SoftBank Group and Intel Corporation sign $2B Investment Agreement.

- Rakuten and rival Amazon plan to launch satellite-based communications providers in Japan by as early as 2026; cites sources - Nikkei.

- Japan LDP Politician Kono Taro: Reiterates Japan must reverse weak Yen; "I think it's better to start early", referring to how soon the BOJ should resume interest rate hikes.

- Reportedly Japan will fund companies expanding abroad in areas from chips to ships – Nikkei.

- Japan sells ¥3.2T vs. ¥3.2T indicated in 12-Month Bills; Avg Yield: 0.6937% v 0.6164% prior; bid-to-cover: 3.37x v 2.73x prior.

- Japan sells ¥800B VS. ¥800B indicated in 20-year JGB bonds; AVG yield: 2.5810% V 2.4820% prior; BID-to-cover: 3.09X V 3.15X prior (below the 3.2x 12-month average coverage ratio).

Korea

- Kospi opens +0.2% at 3,185.

- South Korea Q2 Household Credit (KRW): 1,952.8T v 1,928.7T prior (fastest growth y/y since end-June 2022).

- Bank of Korea (BOK) Gov Rhee: High FX market volatility continues - speech to parliament.

- South Korea Fin Min Koo: Reiterates to stably manage FX market which has been 'volatile'.

Other Asia

- India exempts duty on cotton between Aug 19th to Sept 30th - govt statement.

- Malaysia July Trade Balance (MYR): 15.0B v 5.4Be.

- Malaysia Trade Ministry: Malaysia 2026 GDP to slow by 0.6% to 1.2% due to US tariffs - financial press.

- India reportedly struggles to escape the Trump tariff trap - FT commentary.

- China Foreign Min Wang Yi: India and China should view each other as partners (follows meeting with Indian counterpart).

- India Foreign Min Jaiswal: It is also important that de-escalation on border continues (with China).

- Vietnam imposes official anti-dumping tariff on some galvanized steel products from China and South Korea; To be in place for 5 years - press.

North America

- (US) S&P Affirms US rating at AA+; Outlook Stable.

- (UR) US Pres Trump: I think we'll have successful talk; Working to stop the killing; Russia agreed to accept security guarantees - comments at meeting with EU leaders at White House.

- (US) Ambassador to NATO Whitaker: Security guarantee to Ukraine would be in form of alliance; Hague talks are a framework to what can happen in Ukraine - CNBC.

- (CA) Canada July Annualized Housing Starts: 294.1K v 265.0Ke.

- (US) Aug New York Fed Services Business Activity: -11.7 v -9.3 prior.

- (BR) Brazil Fin Min Haddad: Believe that Brazil's bilateral trade with US will fall even further; Mercosur-EU trade deal will be finished by end-2025.

- (CA) Canada PM Carney: Disappointing that negotiations between Air Canada and flight attendants’ union did not come to agreement.

- (US) AUG NAHB HOUSING MARKET INDEX: 32 V 34E.

- (UR) US Pres Trump: I think we'll have successful talk; Working to stop the killing; Russia agreed to accept security guarantees - comments at meeting with EU leaders at White House.

- (UR) US said to consider using intelligence sharing as leverage to attain Ukraine peace deal - WSJ.

Europe

- (RU) Russia press confirms Trump and Putin spokes after today's White House meeting with Zelenskiy and European leaders.

- (UR) US and Ukraine could reach $50B drone deal as part of security guarantees - FT.

- (DE) German Govt Spokesperson: US tariffs on EU car industry needs to be cut as agreed before wider tariff agreement can be clarified in writing.

- (PL) Poland July CPI Core M/M: 0.3% v 0.3%e; Y/Y: 3.3% v 3.3%e.

- (UK) UK considers replacing stamp duty with new national property tax - press.

- (UR) Ukraine Pres Zelenskiy after meeting with US Ukraine envoy Kellogg: Russia can only be forced to peace through strength, US Pres Trump has that strength - X post.

- (UR) Russia govt: Reiterates opposed to possibility of deploying Western troops on Ukrainian land (as peacekeepers).

Levels as of 01:20 ET

- Nikkei 225 -0.1%, ASX 200 -0.8%, Hang Seng +0.3%; Shanghai Composite +0.3%; Kospi -0.6%.

- Equity S&P500 Futures -0.1%; Nasdaq100 -0.2%; DAX +0.1%; FTSE100 -0.1%.

- EUR 1.1639-1.1675; JPY 147.62-148.11; AUD 0.6485-0.6498; NZD 0.5917-5929.

- Gold +0.1% at $3,381/oz; BTC -0.2% at $115,540; Crude Oil -0.7% at $62.26/bbl; Copper flat at $4.4780/lb.