Trump admin latest moves indicate tariffs may not be 'one and done' after all

Asia market update: Markets largely hold onto Friday's Powell gains but Trump Admin latest moves indicate tariffs may not be 'one and done' after all.

General trend

- Much stronger S&P PMI readings on Friday including strong job creation and inflationary pressures did nothing to assuage the view on Wall St that Fed Chair Powell might deliver a relatively hawkish tone in his Jackson Hole speech later in the morning. On the contrary, stocks and risk assets ripped while rates fell as Powell actually delivered a dovish tone by signaling his growing belief that tariff impacts on inflation are likely to be a one-time price adjustment, given the increasing downside risks to the labor market. The markets welcomed his speech as a sign the Fed will embark on a rate cutting cycle in September.

- US equity FUTs largely held their Friday gains today as Asian equities played catch up. Gold and Silver also held Friday gains. On the other hand Bitcoin which had already lost half of its Friday gains today in a matter of minutes lost all the rest of its Friday gains and then some, plunging to $110K handle for the first time since early July. (Interestingly, ETH, Solana, Cardano, XRP and other coins held most of, if not all of their Friday gains).

- Fresh record high for ASX again, but it was the Hang Seng that outperformed +2.1% and Shanghai also +1.1% amid signs of further stimulus from the China govt as with China Securities Journal reporting that it will 'beef-up' trade-in policy support and further expand it to include services consumption.

- Shanghai govt also eased restrictions on some suburban house buying limits.

- Continued to see big gains in Chinese semiconductors (+5%) and AI stocks (+4%).

- Japan PM Ishiba's Cabinet approval continues to climb, nearing 40%.

- New Zealand Q2 retail sales beat well to the positive when a contraction was expected.

- US Commerce Sec Lutnick confirmed over the weekend that the US now owns 10% of Intel.

- Trump Admin’s Section 232 (national security) probe into wind turbines and components last Thursday was added to over the weekend with Pres Trump announcing a major Tariff Investigation on US Furniture imports, which depending on the definition of ‘furniture’ will hit between $27B to $67B worth of US imports. Moreover, the new probes indicate a further chapter in US tariff strategy may be about to unfold over the coming months as the Trump Admin is likely preparing for a post-IEEPA “reciprocal tariffs” world should both the Federal Appeals Court and ultimately the Supreme Court deem Trump’s Presidential use of IEEPA tariffs illegal. The Appeals Court decision may arrive as early as this week. The Trump Admin looks like it is preparing to replace IEEPA tariffs with a succession of bespoke 301 or 232 Investigation / Sectoral tariffs instead – as the Trump Admin successfully used against China from 2018 and continued by the Biden Administration. In this scenario markets, the Fed, US trading partners and US importers can no longer assume tariffs are now a largely ‘one-and-done’ event. Watch out for any further 301 (unfair trade) or 232 tariff investigations going forward.

- Pres Lee of South Korea holds a Summit with Pres Trump at the White House later today. Agenda includes chips, shipbuilding, batteries, plans for US investment, weapons purchases and talks on nuclear power cooperation.

- Also watch out for the Trump Admin’s expected secondary tariff hike of a further 25% against Indian non-exempt goods as punishment for purchasing Russian oil (over and above the current rate of 25% reciprocal rate) to be effective from Wed Aug 27th.

- TTN China Note: Four scenarios to watch out for at the Sept 3rd China Victory Parade in terms of China leadership: 1) Xi Jinping inspects the troops in an open top car, as previously (means Xi is either still in control or is being allowed to appear as being still in control by other factions); 2) General Zhang inspects the troops (means there has been a quiet military coup), 3) Another general inspects the troops (means Xi, Zhang and various factions still cannot agree nor can one dominate), 4) A group of generals and Xi inspect the troops together (means Xi, Zhang and various factions still cannot agree nor can one dominate).

- US equity FUTs largely flat during Asian trading.

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

- Mon Aug 25th (Mon eve DE Aug Business Climate).

- Tue Aug 26th KR Aug Consumer Confidence, AU RBA Minutes, (Tue night US July Durable Goods).

- Wed Aug 27th KR Aug Business Confidence, AU July CPI, (Wed eve DE Sept GfK Consumer Confidence).

- Thu Aug 28th NZ Aug ANZ Business Confidence, KR BOK Rate Decision, PH BSP Rate Decision, (Thu eve US Q2 GDP 2nd Est).

- Fri Aug 29th JP July Retail Sales, JP July Industrial Prod, JP Aug Consumer Confidence, IN Q2 GDP (Fri night US July Core PCE).

Holidays in Asia this week

- Mon Aug 25th Philippines.

- Wed Aug 27th India.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.8% at 9,039.

- New Zealand Q2 Retail Sales (Ex Inflation) Q/Q: +0.5% v -0.3%e.

- New Zealand RBNZ proposes materially reducing capital requirements for deposit takers to NZ$5.0M - financial press.

- New Zealand PM Luxon said to agree with the RBNZ board members who supported 50bps rate cut - financial press.

China/Hong Kong

- Hang Seng opens 1.1% at 25,606; Shanghai Composite opens +0.6% at 3,848.

- China said to be 'hoping' the Trump Administration approves the sale of the 'stripped-down' Blackwell-based chip for China - NYT [update].

- China CSI Semiconductor Index rises ~5.0%, extends gains from Fri; China CSI AI index up ~4.0%.

- Shanghai reported to ease home buying limits in 'outer suburbs'; Effective Aug 26th - financial press.

- China said to 'beef-up' trade-in policy support and expand to services consumption in order to increase overall consumption - China Securities Journal.

- US FCC said to be moving to exclude China from undersea cable supply chains - Nikkei (update).

- (CN) China PBOC sets Yuan reference rate: 7.1161 V 7.1321 PRIOR (strongest fix since Nov 6th, 2025 and by the most since Jan, 2025).

- China PBOC Open Market Operation (OMO): Injects CNY288B in 7-day reverse repos; Net injects CNY22B v injects CNY123B prior.

Japan

- Nikkei 225 opens +0.8% at 42,950.

- BOJ Gov Ueda reiterated expects tightening job market to push up wages - financial press [update from Aug 23rd].

- Japan expected to establish a new organization to manage economic security in various areas including shipbuilding, aviation, railway and ocean freight - Nikkei [update]

- India PM Modi to visit Japan from Aug 29-30th – press [weekend update].

Korea

- Kospi opens +0.8% at 3,195.

- South Korea Pres Lee: Hard to agree to flexibility on US forces in Korea - Korean press, comments ahead of Summit with Pres Trump.

- (KR) South Korea Top Security Advisor: Plans for US investment and weapons purchases are under review; In talks on nuclear power cooperation with US [weekend update].

North America

- (US) Pres Trump: Both NBC and ABC should lose their licenses - financial press.

- (US) Fed's Goolsbee (voter): Still concerned about inflation - comments at Jackson Hole Symposium (update).

- Keurig Dr Pepper said to near $18.0B deal for JDE Peet's - WSJ [update].

- (US) CBO says if Trump tariffs stay in place until 2035, they will now reduce the US deficit by $4.0T (v prior estimate of $3.0T) - FT (update).

- (US) First case of New World Screwworm detected in the US - financial press, citing sources.

- (US) Pres. Trump: We are doing a major Tariff Investigation on Furniture coming into the US; This will bring the Furniture Business back to North Carolina, South Carolina, Michigan, and States all across the Union. [weekend update].

- US posts notice of Section 232 probe into wind turbines and components [weekend update].

- Commerce Sec Lutnick confirms US now owns 10% of Intel.

Europe

- (EU) ECB rate cut 'talk' may resume after Sept pause; cites sources - financial press [update].

Levels as of 01:20 ET

- Nikkei 225 +0.4%, ASX 200 +0.1%, Hang Seng +2.0%; Shanghai Composite +0.7%; Kospi +1.0%.

- Equity S&P500 Futures flat; Nasdaq100 flat; DAX -0.3%; FTSE100 +0.1%.

- EUR 1.1694-1.1713; JPY 146.80-147.53; AUD 0.6472-0.6496; NZD 0.5852-5871.

- Gold -0.3% at $3,409/oz; BTC -2.1% at $112,740; Crude Oil +0.1% at $63.70/bbl; Copper +0.3% at $4.5425/l7.