Global equities down on no specific event, but JP chip-related TE lit the fuse?

Asia Market Update: Global equities down on no specific event, but JP chip-related TE lit the fuse? Trade deal rush; Focus on US NFP.

General trend

- US equities fell heavily overnight, for what appeared to be no reason, at least domestically, amid continued strong earnings overall. However, a clue that potentially the AI capex-driven boom of recent times may have been put into some question overnight from chip-related Tokyo Electron, whose ADRs were down nearly -15% after cutting both Net and Rev guidance and warning of “sluggish demand” in chips for autos and industry. Negativity followed through to Europe last night where ASML was also down nearly -4% while in the US session EFT SMH also down sympatico -2.5% as well as the Nasdaq.

- Today the thread continued into Asia with Hynix -4% as Korea’s Kospi fell as much as -4%, with all other indices down less than 1% in Asia.

- JPY/USD plunged through ¥150 overnight for the first time since prior to “Liberation Day” tariffs on Apr 2nd, spurring a warning from Japan’s Fin Min. Fall came after dovish comments from Gov Ueda that the BOJ cautiously needs “more time to assess tariff impacts”, pushing back expectations for the next rate hike to Jan 2026 (OIS change??}. Tellingly, Ueda said that too-high inflation cannot easily be controlled when price rises are driven by supply factors (as opposed to demand-driven inflation) as it would reduce household income and weigh on consumption.
** Trade-related news ahead of final August 1st deadline:

- Trump Admin announced overall tariffs on countries ranging from 10% to 40% today. Australia looks to have received just 10%, as its Trade Ministry also confirmed no country has less than a 10% tariff. However, neighbor New Zealand has increased to 15%.

- Thailand and Malaysia confirmed 19% US tariff rates, with both nations trumpeting the reduced rates as a ‘significant achievement’.

- White House also confirmed that the global amount to be charged for transshipments will be 40% (the amount applied to Vietnam transshipments earlier in July).

- 20% tariffs on goods from Taiwan [down from the Apr rate of 32%] but Pres Lai and a US official confirmed negotiations still ongoing as Taiwan attempts to reduce the rate further.

- Mexico-US extend the current trade deal for 90 days as talks continue.

- Canada harshly dealt with, as telegraphed this week, US tariffs increased from 25% to 35%.

- US Tsry Sec Bessent frankly admitted frustration with India and says he has no idea what is going to happen with US-India agreement otherwise. Comes as Trump threatens extra penalties for buying Russian oil on top of India’s new 25% rate.

- Still waiting to hear any China-US developments, as the complexity around a deal deepens with further reports China is pausing US-bound company investment amid trade war.

- Swiss Franc weakened to the week’s lows vs USD as Trump hiked to a 39% tariff on goods from Switzerland, vs Apr tariff rate of 31%

- Meanwhile, a panel of judges on the federal Circuit Court of Appeals expressed deep skepticism over the White House’s justification for its sweeping tariff authority, suggesting a ruling could come down next month against reciprocal tariffs, which would likely then send the issue to the Supreme Court when it returns for a new term in October.

- Pres Trump said he is still open to further deals and negotiations.

Other data and news

- China’s July Caixin PMI manufacturing fell for only the second time since October 2023, with a noticeable slowdown in new orders growth which included export orders contracting even faster than in June.

- Australia July Final PMI Manufacturing confirmed a 7th month of expansion; Japan confirmed a move back into contraction while over half of Asian nations stayed mired in contraction (Vietnam, Thailand, Philippines expanded).

- South Korea chip exports for July again strong +39.3% y/y, with ship exports +107.6%. Despite tariffs exports to the US rose somewhat, whilst falling to China. South Korean Won weakened past 1,400 for the first time since mid-May.

- New Zealand consumer confidence fell back, with inflation expectations back to over 5%, highest since April, 2023. Food inflation at 4.2% influential in the expectations.

- Australia Q2 PPI came in lower than prior quarter, blamed on Property operators’ growth having “slowed notably” over the past year.

- Pres Trump said to be attending the ASEAN Summit in October.

- Focus on US July Nonfarm Payrolls tonight.

- US equity FUTs -0.2% during Asian trading.

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

- Fri Aug 1st (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 -0.7% at 8,681.

- AUSTRALIA TRADE MIN SPOKESPERSON: CONFIRMS NO COUNTRY HAS TARIFF LESS THAN 10%.

- Australia Q2 PPI Q/Q: 0.7% v 0.9% prior; Y/Y: 3.4% v 3.7% prior.

- Australia July Final Manufacturing PMI: 51.3 v 51.6 prelim (confirms 7th month of expansion).

- Australia sells A$1.2B vs. A$1.2B indicated in 2.75% Jun 2035 bonds; Avg Yield: 4.2953% v 4.1380% prior; bid-to-cover: 3.30x v 3.36x prior.

- New Zealand tariff rate to US confirmed to be raised to 15% (prior 10%) White House statement.

- New Zealand Jun Building Permits M/M: -6.4% v 10.3% prior.

- New Zealand July ANZ Consumer Confidence: 94.7 v 98.8 prior.

China/Hong Kong

- Hang Seng opens -0.1% at 24,744; Shanghai Composite opens -0.1% at 3,568.

- CHINA JULY CAIXIN PMI MANUFACTURING: 49.5 V 50.2E (moves back into contraction).

- China Commerce Min (MOFCOM): Announces tax credit policies for direct investment by foreign investors - financial press.

- Macau Jul (MOP) Casino Rev Y/Y: 22.1B, +19% y/y.

- US Official: No final decision on China yet (referring to trade deal / tariffs).

- More press reports China pauses US-bound company investment amid trade war – Nikkei [overnight update].

- China Cabinet reiterates stance to consolidate economic recovery and step up efforts to enhance macroeconomic policies [overnight update].

- US House introduces a bill sanctioning China over its treatment of the Uyghur minority.

- Hong Kong Jun M3 Money Supply Y/Y: 8.4% v 9.5% prior [overnight update].

- Hong Kong Jun Retail Sales Value Y/Y: 0.7% v 1.4%e; Retail Sales Volume Y/Y: -0.3% v +0.2%e.

- Hong Kong Q2 Advance GDP Q/Q: 0.4% v 0.1%e; Y/Y: 3.1% v 2.8%e [overnight update].

- China PBOC sets Yuan reference rate: 7.1496 v 7.1494 prior.

- China PBOC Open Market Operation (OMO): Injects CNY126B in 7-day reverse repos; Net drains CNY663B v drains CNY48B prior.

Japan

- Nikkei 225 opens flat at 41,051.

- Japan July Final Manufacturing PMI: 48.9 v 48.8 prelim (confirms moves back into contraction).

- Japan Jun Jobless Rate: 2.5% v 2.5%e.

- Japan Economy Min/Trade Negotiator Akazawa: Reiterates US tariffs will impact Japan through lower exports.

- Japan Labor Ministry Council: Eyes approx 6% hike to FY25 average minimum wage; Would be biggest rise ever - Kyodo.

- Tier1 analysts continue to expect the next BOJ hike in Jan 2026 after Ueda indicated at the press conference that the BoJ needs more time to assess the tariff impacts, confirming that it remains cautious about raising interest rates despite market expectations for an early hike. [overnight update].

- BOJ Gov Ueda: Trade agreement with US is great progress and step forward - post rate decision press conference [overnight update].

- BOJ GOV UEDA: 'THAT IS TRUE IF THAT BECOMES THE CASE' WHEN ASKED ABOUT RATE HIKE PACE WOULD PICK UP IF FALLING INTO BEHIND-THE-CURVE SITUATION [overnight update].

- Japan Industry Min Muto: Japan "will not hesitate" on additional tariff measures - financial press [overnight update].

- Bank of Japan (BOJ) announcement related to bond buying operations: leaves bond buying pace unchanged compared to July [overnight update].

Korea

- Kospi opens -1.1% (update).

- South Korea July PMI Manufacturing: 48.0 v 48.7 prior (seventh month of contraction).

- South Korea Trade Min: To actively respond to copper tariffs to minimize domestic impact; Copper product exports to US expected to decline 'inevitably' due to 50% tariffs - financial press.

Other Asia

- Indonesia July CPI M/M: 0.3% v 0.2%e; Y/Y: 2.4% v 2.3%e.

- Taiwan July PMI Manufacturing: 46.2 v 47.2 prior (fifth month of contraction).

- Taiwan Finance Ministry: Will 'work on' countermeasures to address US tariffs situation.

- (TW) US to impose 20% tariffs on goods from Taiwan [down from the Apr rate of 32%].

- Thailand confirms 19% US tariff rate a "win-win strategy" and is aligned with the region to maintain Thailand's competitiveness, help with exports - financial press.

- White House cuts tariff rate on Malaysia to 19% vs Apr rate of 24% - update.

- Taiwan Q2 Advance GDP Y/Y: 8.0% v 5.7%e [overnight update].

- Taiwan Central Bank (CBC) Jun Minutes: FX rate remains market-driven, but central bank may intervene if volatility threatens financial stability [overnight update].

- (US) Treasury Sec Bessent: Whole trade team has been frustrated with India; I do not know what is going to happen with India; Will talks with Trump today on China – CNBC [overnight update].

North America

- (US) President Trump: New 'high' tariffs are going 'very well, very smooth', but open to more deals - NBC [no comments seen on China].

- (CH) Trump to impose 39% tariff on goods from Switzerland, vs Apr tariff rate of 31%.

- US PRES TRUMP ANNOUNCES TARIFFS ON COUNTRIES RANGING FROM 10% TO 41%.

- (CA) Trump signs EO increasing tariffs on Canada from 25% to 35%; Transshipped goods that evade the 35% rate on Canada will be subjected to 40% tariffs.

- *(US) White House: US Pres Trump signs EO maintain minimum reciprocal tariff at 10%, which modifying rates for certain countries.

- Mexico Econ Min Ebrard: Tariff debate with US include concerns about IP and rules of origin panel.

- (US) JUN PCE PRICE INDEX M/M: 0.3% V 0.3%E; Y/Y: 2.6% V 2.5%E.

- US) INITIAL JOBLESS CLAIMS: 218K V 224KE; CONTINUING CLAIMS: 1.946M V 1.95ME.

- (US) JUN PERSONAL INCOME: 0.3% V 0.2%E; PERSONAL SPENDING: 0.3% V 0.4%E.

- (US) Q2 EMPLOYMENT COST INDEX (ECI): 0.9% V 0.8%E.

- (CA) CANADA MAY GDP M/M: -0.1% V -0.1%E; Y/Y: 1.2% V 1.1%E.

- US) JULY CHICAGO PURCHASE MANAGERS INDEX (PMI): 47.1 V 42.0E.

- (US) PRES. TRUMP: JEROME “TOO LATE” POWELL HAS DONE IT AGAIN!!! HE IS TOO LATE, AND ACTUALLY, TOO ANGRY, TOO STUPID, & TOO POLITICAL, TO HAVE THE JOB OF FED CHAIR.

- (US) WEEKLY EIA NATURAL GAS INVENTORIES: +48 BCF VS. +36 BCF TO +38 BCF INDICATED RANGE.

- (MX) US Pres Trump: Finished call with Mexico Pres Sheinbaum; To extend current trade deal for 90 days as talks continue; Mexico to pay a 25% Fentanyl Tariff, 25% Tariff on Cars, and 50% Tariff on Steel, Aluminum, and Copper - Truth Social post.

- (US) US Circuit Court of Appeals judges panel expresses skepticism over White House’s justification for sweeping tariff authority.

- (US) US Pres Trump sent 17 letters to US major drug and pharma companies regarding Medicaid pricing; Calls on pharma companies to take action within 60 days (Sept 29th deadline) - Posts letter on Truth Social.

Europe

- (CH) Trump to impose 39% tariff on goods from Switzerland, vs Apr tariff rate of 31%.

- (DE) Germany Jun Import Price Index M/M: 0.0% v -0.2%e; Y/Y: -1.4% v -1.6%e.

- (CH) Swiss Jun Real Retail Sales Y/Y: 3.8% v 0.3% prior.

- (FR) France July Preliminary CPI M/M: 0.2% v 0.2%e; Y/Y: 1.0% v 1.0%e.

- (FR) France July Preliminary CPI EU Harmonized M/M: 0.3% v 0.2%e; Y/Y: 0.9% v 0.8%e.

- (FR) France Jun PPI M/M: -0.2% v -0.9% prior; Y/Y: 0.2% v 0.0% prior.

- (DE) Germany July Unemployment Change: +2.0K v +15.0Ke; Claims Rate: 6.3% v 6.3%e.

- (IT) Italy Jun Unemployment Rate: 6.3% v 6.4%e.

- (ES) Spain May Current Account Balance: €6.4B v €1.4B prior.

- (EU) Euro Zone Jun Unemployment Rate: 6.2% v 6.3%e.

- (IT) Italy July Preliminary CPI M/M: 0.4% v 0.1%e; Y/Y: 1.7% v 1.5%e.

- (IT) Italy July Preliminary CPI EU Harmonized M/M: -1.0% v -1.1%e; Y/Y: 1.7% v 1.6%e.

- (DE) GERMANY JULY PRELIMINARY CPI M/M: 0.3% V 0.2%E; Y/Y: 2.0% V 2.0%E.

- (ZA) SOUTH AFRICA CENTRAL BANK (SARB) CUTS INTEREST RATES BY 25BPS TO 7.00%; AS EXPECTED.

Levels as of 01:20 ET

- Nikkei 225 -0.7%, ASX 200 -0.9%, Hang Seng -0.7%; Shanghai Composite -0.4%; Kospi -3.8%.

- Equity S&P500 Futures -0.2%; Nasdaq100 -0.2%; DAX -0.6%; FTSE100 -0.1%.

- EUR 1.1405-1.1429; JPY 150.55-151.91; AUD 0.6422-0.6441; NZD 0.5875-5898.

- Gold -0.1% at $3,344/oz; BTC -2.3% at $115,570; Crude Oil +0.1% at $69.36/bbl; Copper -0.3% at $4.4202/lb.