Asia asset volatility in focus

EU mid-market update: Asia asset volatility in focus as KOSPI closes +18% and yen drops five big figures following FX intervention; Apple down, Amazon up; Heading into weekend with geopolitical risk.

Notes/observations

- Europe opens balancing a heavy earnings slate against sticky inflation: Eurozone flash CPI printed 2.9% y/y as expected but core surprised at 2.5%, a fifth straight month above target. Bunds are enduring their worst July in over two decades, with Barclays dubbing 2026's theme "war-on, war-off." Earnings were broadly solid, NatWest beat and raised with a buyback in view, Crédit Agricole and AXA both impressed, offset by a Siemens Healthineers revenue cut, an IAG miss with flat capacity guidance, and Taylor Wimpey trimming UK completions while warning on housing viability.

- Intense KOSPI volatility: After ~25% losses earlier in the week from the $24B "Situational Awareness" hedge fund blow-up and forced liquidation of its AI book, Korean equities staged a violent boomerang rally: the KOSPI surged as much as +17%, with Samsung +24% and SK Hynix +29%, dragging Japanese chip names higher and the Nikkei up over 4%. Korea is reportedly readying $14B to backstop its wealth fund's related failed AI bets, a reminder of concentrated AI positioning risk.

- Situational Awareness’s episode echoes LTCM in 1998 (this time AGI infrastructure rather than bond convergence), which was levered so aggressively that the moment prices reversed, the fund’s own existence became the market event: margin calls dictated the selling, not the long-term merit of the positions. The Dot-com rhyme is sharper still—many 1999–2000 vehicles remained massively positive year-to-date even as they were liquidated into a vacuum, proving that narrative faith can outlive the funds that rode it hardest. Some are already calling it Archegos 2.0: Situational Awareness’s leveraged AI book hit the same wall Bill Hwang did in 2021. Like Archegos, the fund had been massively profitable on the year until leverage turned a sharp but ordinary drawdown into a self-reinforcing margin spiral that dictated selling regardless of the long-term thesis.

- BOJ decision and Yen intervention: The BOJ held at 1.00% (8-1, Takata dissenting for a hike), with Ueda leaning hawkish, "firm discussions from next meeting" and a pledge not to fall behind the curve; October now prices ~79% odds of a 25bp hike. The BOJ's job was eased by a historic triple intervention: Japan buying yen (officially confirmed), Korea's rare dollar-selling, and US rate checks, with Bessent calling the yen "very undervalued." USD/JPY snapped from 40-year lows near 163 to 158 in an hour, though it has since drifted back to ~160.40 as markets judged the BOJ too cautious. In last few minutes, more sudden yen strengthening to below 159 against USD.

- During overnight earnings calls both Amazon and Apple confronted the same AI-driven capital intensity problem from opposite sides of the stack. Amazon raised 2026 CapEx to ~$220B and openly warned of “heavy CapEx” for years ahead to expand AWS, yet insisted it remains “enthusiastic about the resulting ROIC profile” because server and network investments break even in under three years, carry five-to-six-year lives, and are increasingly locked in by contracts of at least five years—even while capacity will still fall short of demand through 2027 and the $496B backlog grows at triple-digit rates. Apple, facing the identical “100-year flood” in memory pricing that more than explained sequential gross-margin pressure, said it had “reluctantly raised prices” on Mac and iPad and will see those costs keep climbing, yet still guided Q4 revenue growth of 9–11% and called the early public- and developer-beta response to the reimagined Siri “phenomenal.” Both managements are apparently betting the long-duration contracts and platform pull-through will ultimately justify the spend.

- Geopolitics taking a backseat: Middle East risk ceded the driver's seat as Hamas reportedly agreed to a disarmament framework, helping Treasuries reverse Thursday's extremes (30-year had hit a 19-year high) and pushing Brent back toward the $80s. But weekend risk is intact: Iran struck US facilities in Kuwait, the Pentagon seeks $18.2B in Iran war funds, and Trump has been presented options for a 10–14 day air campaign. Ukraine hit another Russian refinery and Romania briefly scrambled jets.

- Asia closed higher with KOSPI outperforming +18%. EU indices +0.8-1.0%. US futures +0.5-1.3%. Gold -1.2%, DXY +0.1%; Commodity: Brent -0.5%, WTI -0.9%; Crypto: BTC -1.2%, ETH -1.5%.

Asia

- Bank of Japan (BOJ) leaves target rate unchanged at 1.00%; as expected.

- Government official: confirms Japan conducted FX intervention.

- Japan top FX diplomat Mimura to be reappointed for third term - Japan govt statement.

- Japan Jun Retail Sales M/M: -4.1% V -1.6%E; Y/Y: 0.5% V 3.1%E; Dept. Store, Supermarket Sales Y/Y: -1.0% v +5.0% prior.

- Japan July TOKYO CPI Y/Y: 2.0% V 1.8%E; CPI (EX-FRESH FOOD) Y/Y: 1.9% V 1.8% [Tokyo CPI rises at fastest pace since December, 2025]; CPI (ex-fresh food/energy) Y/Y: 2.0% v 2.0%e.

- Japan Jun preliminary industrial production M/M: 1.3% V 1.0%E; Y/Y: 4.2% V 3.2%E.

- Japan govt and BOJ intervened in the Forex market today, buying Yen vs Dollar in the NY market - Nikkei.

- South Korea Dep Fin Min Moon Ji-sung (FX chief): Coordinating closely with major countries such as Japan and US on FX markets; Declines to comment on whether South Korea intervened in Won.

- South Korea FX authorities conducted rare dollar-selling intervention on Thursday [follows the earlier reporting about suspected FX intervention by Japan] - Market Sources.

- Korea said to plan $14B for wealth fund's failed "AI bets" after "Situational Awareness" hedge fund blow out earlier this week.

- China July manufacturing PMI (GOVT official): 49.2 V 50.1E (moves into contraction after 4th month of expansion).

- China MOFCOM: Extending probe into Canadian pea starch by 6 months to Feb 12th 2027.

Europe

- Spain Interior Min: Estimate 49K migrants crossed into Ceuta over last 24 hours.

- (DE) German Foreign Ministry: Welcome Trump's deal to disarm Hamas.

Americas

- National Economic Council Hassett: If needed, we'll continue measures to lower oil prices - CNN.

- US Treasury Sec Bessent: Japan may have intervened in currency markets earlier on Thursday [30th July, 2026] - Fox Business.

-Tesla said to consider sale of China business to make way for potential SpaceX merger – WSJ.

Conflict/tensions

- Iran Army: Carried out drone attacks on US military facilities in Kuwait's Ahmed al Jaber air base (time frame uncertain).

- President Trump: 'Not sure' will let Ukraine build Patriot missiles - FT.

- Romania Defense Ministry: Scrambles two jets as aerial targets detected near border river with Ukaine - post on X.

- US, Ukraine signed a pact last week on drone technology; Ukraine's drones can be sent to US for military testing - NBC [citing Ukraine's Ambassdaor].

- US Pentagon said to seek $18.2B in Iran war funds for interceptors - US financial press.

- Ukraine confirms attack on Russian Volgograd Refinery - press.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE +0.76% at 10,980.33, DAX +1.07% at 25,847.63, CAC-40 +0.90% at 8,562.14, IBEX-35 +0.89% at 19,934.39, FTSE MIB +0.89% at 52,566.00, SMI +0.49% at 14,463.60, S&P 500 Futures +0.52%].

Market focal points/key themes: European stock markets opened solidly higher on Friday, with major benchmarks across Germany, France, the UK and the wider Eurozone advancing as traders embraced the overnight risk-on mood. The positive tone followed a sharp relief rally in U.S. semiconductor stocks that delivered the S&P 500 its strongest session in nearly two months. Microsoft’s well-received results helped restore confidence in the AI theme, while Amazon’s strong cloud outlook and raised spending guidance further supported chip-related names. Among individual movers, ASML rose on the back of Amazon’s upbeat comments and strength in Asian semiconductor stocks. NatWest and Engie both advanced after releasing earnings, while Puma fell sharply on its results. IAG and Siemens Healthineers also traded lower following their earnings reports. Attention remains on the mixed U.S. tech reaction after the close—Apple’s slightly softer sales and margin outlook contrasted with Amazon’s robust AWS performance—alongside Elon Musk’s dismissal of reports about a possible Tesla China spin-off. Overnight, the Bank of Japan held rates steady amid yen volatility and geopolitical caution. European markets are tracking the broader global rebound while digesting these company-specific earnings moves.

Equities

- Consumer discretionary: IAG [IAG.UK] -1.5% (earnings).

- Energy: Engie [ENGI.FR] +4.5% (earnings).

- Financials: Natwest [NWG.UK] +3.5% (earnings).

- Healthcare: Siemens Healthineers [SHL.DE] -0.5% (earnings).

- Technology: ASML [ASML.NL] +2.5% (Amazon outlook; strength in Asian chip names).

Speakers

-(JP) BOJ Gov Ueda: BoJ will consider timing and pace of rate adjustment while taking factors like likelihood, risks of achieving economy, price outlook baseline scenario; To take considerable time until impact of interest rate decision spreads to economy, prices broadly; Price trend is approaching 2% - post rate decision press conference.

-BOJ GOV UEDA: Will have firm discussions from next meeting on [**Note: next BOJ meeting is in Sept with ~25% chance of 25bps hike priced in; Next rate hike almost fully priced by Oct's meeting].

-Japan Chief Cab Sec Kihara: Decline to comment on whether intervened or not.

-Philippine Central Bank: July annual inflation likely within range of 5.6-6.6%.

-US Treasury Sec Bessent: Japan may have intervened in currency markets earlier on Thursday [30th July, 2026] - Fox Business.

-(ZA) South Africa Central Bank (SARB) Gov Kganyago: Domestic yields show confidence we can deliver 3% inflation target.

Economic data

-(IT) Italy July preliminary CPI M/M: 0.2% V 0.3%E; Y/Y: 2.8% V 2.8%E; CPI EU Harmonized M/M: -1.0% v -1.0%e; Y/Y: 2.9% v 2.9%e.

-(EU) Euro Zone July preliminary CPI estimateY/Y: 2.9% V 2.9%E; CPI core Y/Y: 2.5% V 2.4%E.

- CPI Preliminary M/M: 0.2% v 0.1%e; Y/Y: 2.9% v 2.9%e.

-(HK) Hong Kong Jun M1 Money Supply Y/Y: -3.0% v 2.0% prior; M2 Money Supply Y/Y: 2.6% v 1.1% prior; M3 Money Supply Y/Y: 2.6% v 1.0% prior.

-(HK) Hong Kong Q2 Advance GDP Q/Q: -0.6% v 0.2%e; Y/Y: 4.3% v 4.9%e.

-(PT) Portugal July Preliminary CPI M/M: -0.5% v +0.1% prior; Y/Y: 3.0% v 3.2% prior; CPI EU Harmonized M/M: -0.3% v +0.1% prior; Y/Y: 3.1% v 3.1% prior.

-(ES) Spain May Current Account Balance: €1.8B v €1.9B prior.

-(CZ) Czech Jun M2 Money Supply Y/Y: 6.1% v 5.1% prior.

-(IT) Italy July Consumer Confidence: 94.2 v 92.8e; Manufacturing Confidence: 89.6 v 88.8e; Economic Sentiment: 95.6 v 95.3 prior.

-(TW) Taiwan Q2 Advance GDP (1st of 3 readings) Y/Y: 12.9% v 10.5%e.

-(DE) Germany July net unemployment change: +6.0K V +5.0KE; claims rates: 6.4% V 6.3%E.

-(TH) Thailand May Foreign Reserves w/e July 24th: $272.6B v $276.0B prior.

-(PL) Poland July Preliminary CPI M/M: 0.8% v 0.7%e; Y/Y: 3.0% v 3.0%e.

-(FR) France Jun PPI M/M: -0.6% v -0.2% prior; Y/Y: 2.6% v 3.1% prior.

-(FR) France July preliminary CPI M/M: 0.6% V 0.3%E; Y/Y: 2.1% V 1.8%E; CPI EU Harmonized M/M: 0.6% v 0.3%e; Y/Y: 2.4% v 2.0%e.

-(HU) Hungary Jun PPI M/M: +0.1% v -1.7% prior; Y/Y: -0.4% v -0.7% prior.

-(CH) Swiss Jun Real Retail Sales Y/Y: 1.5% v 3.4% prior.

-(NO) Norway Jun Credit Indicator Growth Y/Y: 4.4% v 4.5% prior.

-(UK) July nationwide house price index M/M: 0.1% V 0.1%E; Y/Y: 1.8% V 1.9%E.

-(JP) Japan Jun Annualized Housing Starts: 786K v 750Ke; Y/Y: 18.6% v 12.7%e.

-(FI) Finland Jun Retail Sales Volume Y/Y: 2.3% v 5.7% prior.

-(NL) Netherlands July Preliminary CPI Y/Y: 3.1% v 3.0%e; CPI EU Harmonized M/M: 1.5% v 1.3%e; Y/Y: 2.9% v 2.6%e.

-(UK) July Lloyds Business Barometer: 49 v 44 prior [4-month high]; Own Price Expectations: 54 v 55 prior.

Fixed income issuance

-(IN) India sells INR340B vs. INR340B indicated in 6.94% 2036 bonds; Avg Yield: 6.8117%.

-(DK) Denmark sells total DKK1.5B in 1-month and 3-month bills.

Looking ahead

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2031, 2050 and 2058 Bonds.

- 06:00 (UK) DMO to sell £5.5B in 1-month, 3-month and 6-month bills (£0.5B, £2.0B and £3.0B respectively).

- 06:00 (PT) Portugal Jun Industrial Production M/M: No est v 0.9% prior; Y/Y: No est v -2.3% prior.

- 06:30 (IN) India Jun Fiscal Deficit YTD (INR): No est v 1.624T prior.

- 07:30 (BR) Brazil Jun Nominal (overall) Budget Balance (BRL): -128.5Be v -163.7B prior; Primary Budget Balance (BRL): -49.8Be v -56.1B prior; Net Debt to GDP: 68.3%e v 67.9% prior.

- 07:30 (IN) India Forex Reserve w/e July 24th: No est v $676.2B prior.

- 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance(if any).

- 08:00 (ZA) South Africa Jun Trade Balance (ZAR): -3.0Be v -1.8B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:01 (NZ) New Zealand Jul Cotality Home Value M/M: No est v -0.2% prior.

- 08:30 (US) Q2 Employment Cost Index (ECI): 0.8%e v 0.9% prior.

- 08:30 (CA) Canada May GDP M/M: 0.2%e v 0.5% prior; Y/Y: 1.4%et v 1.1% prior.

- 09:00 (IN) India announces upcoming bill issuance (held on Wed).

- 09:00 (CL) Chile Jun Unemployment Rate: 9.5%e v 9.4% prior.

- 09:00 (CL) Chile Jun Retail Sales Y/Y: 3.0%e v 4.8% prior; Commercial Activity Y/Y: No est v 1.6% prior.

- 09:00 (CL) Chile Jun Industrial Production Y/Y: -3.5%e v -7.5% prior; Manufacturing Production Y/Y: -4.5%e v -7.2% prior; Total Copper Production: No est v 423.6K tons prior.

- 09:45 (US) July Chicago Purchase Managers Index (PMI): 56.0e v 56.7 prior.

- 10:00 (US) July Final University of Michigan Sentiment: 54.0e v 54.4 prelim.

- 11:00 (MX) Mexico Jun Net Outstanding Loans (MXN): No est v 7.414T prior.

- 11:00 (CO) Colombia Jun National Unemployment Rate: No est v 8.0% prior; Urban Unemployment Rate: 8.7%e v 8.5% prior.

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 14:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to raise Overnight Lending Rate 3by 50bps to 12.50%.

- 20:00 (KR) South Korea July Trade Balance: No est v $36.1B prior; Exports Y/Y: No est v 70.7% prior (revised from 70.9%); Imports Y/Y: No est v 30.0% prior (revised from 30.1%).