Global yields and Oil fall on apparent US-Iran progress

Asia market update: Global yields and oil fall on apparent US-IR progress; More weak CN PMIs; Speculated US ban related to CN and data centers; SanDisk, Western Digital report post-close.

General trend and developments

- WTI crude front FUTs dipped down into the $73/bbl handle on news that the US neared a Strait of Hormuz deal. US Treas Sec Bessent also chimed in on the Hormuz situation,“We may have an Iran deal tomorrow (Wed). Gold +1% back over $4,100/oz and Silver +3% back over %60/oz.

- Nasdaq FUTs added a few tenths to their +3% regular session strong gains, while S&P500 and Dow Jones also continued up in Asia, improving on their fresh record highs reached during US trading.

- Kospi +4.3% and Nikkei +3.4% chimed in.

- China saw another weak PMI reading, this time RatingDog’s July Services PMI, a full three Big Handles lower than expectations and only just holding onto expansionary territory in the lowest reading since September, 2024. Softer domestic demand blamed.

- New Zealand saw strong job gains, although the increased participation rate by +0.3% actually saw the unemployment rate rise to an 11-year high, a sign more people are searching for work.

- Japanese wage growth met or exceeded expectations.

- [Reminder US Nonfarm Payrolls coming up this Friday].

US-China tech trade wars

-US House China panel report accused the Chinese Communist Party of infiltration and weaponization of Americans' communications and networks. Findings included China Telecom, China Mobile, and China Unicom’s US subsidiaries are "not truly independent" from their PRC and Hong Kong parent companies.

-The White House will exclude open models from its framework to test advanced AI capabilities.

-Major Chinese makers of optical tranceivers such as Zhongji Innolight and Eoptolink fell between-6% to -8% on news the Trump Admin & FCC are preparing to set a price floor and tariffs on imports of poly-silicon and derivative products in chips and solar panels over national security and cybersecurity risks to AI data centers.

-Meanwhile Samsung and Hynix reportedly testing AMEC's (Advanced Micro Fabrication Equipment) high-end plasma chip tools at their China plants in case US curbs hit Western-tool servicing.

-In further AI news, Open AI said that external testing partners identified new cyber-security incidents with latest OpenAI models; Comes after the much-publicized Hugging Face infiltration by escaped OpenAI agents.

Central bank roundup

- India Central Bank (RBI) left its Repurchase Rate unchanged at 5.25%, as expected, in a unanimous vote, saying that core inflation remains tame and benign.

- Bank of Korea (BOK) July Minutes showed board members considered another rate hike, with one member saying the solitary rate increase alone unlikely to be sufficient (Reminder that the BOK hiked for the first time in more than three years in July).
-Bank of Japan (BOJ) June Minutes (2 decisions ago) saw several members saying the BOJ must be more mindful than before of upside price risks (inline with June’s Summary of Opinions).

- Overnight BOJ data showed that Japan may not have intervened in the forex market Monday despite the final Yen surge. Overnight US Treas Sec Bessent also said the US will do 'whatever it takes' to support Japan amid yen support.

- US Fed's Schmid (hawk; non-voter in 2026) said that tighter policy needed to return inflation to 2% target and that his primary concern is inflation.

US earnings

- SpaceX lost less than expected on strong Q2 revenue of $7.8B, while announcing an exclusive partnership to build AI services on NVIDIA's Vera Rubin architecture. Despite this, the stock after hours lost -7.7%, giving back most of its regular session +9% gains. Q2 capex came in at $18.37B, slightly below $18.58B estimates. CEO Musk in post-earnings comments said that Grok 5.0 should be out by end of year and will be trained on all SpaceX data, which he believe will make it the best model for engineering model “by far”.

- However, note that today’s Form S-8 filed by SpaceX today confirmed to allow holders to sell nearly 137M shares of Class A Common Stock (~1.8% of outstanding) following the expiration of IPO lock-up agreements, with a major unlock set for Thurs, Aug 6th.

- Similarly, AMD was up +7% during day but turned around and lost even more, -8.8% after the close with the company’s 50% Rev increase y/y and its key data center growth more than doubling y/y, but could barely meet analyst expectations for revenue forecasts - showing how high investors now set the bar for AI-related companies.

- Following hard drive-makers SanDisk and Western Digital earnings after the close Wed, just Nvidia to come later in August for Big Tech earnings.

- US equity FUTs +0.3% to +0.4% during Asia trading.

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

-Wed Aug 5th: Global July Services PMI’s Day, EU Jun PPI, (Wed night, US July ADP Nonfarm Employment Change, US July S&P/ISM Svcs PMI).

-Thu Aug 6th: AU Jun Trade Balance, EU Jun Retail Sales.

-Fri Aug 7th: JP Jun Household Spending, PH Q2 GDP, CN July Trade Balance (Fri night, US July Nonfarm Payrolls & Unemployment Rate).

Holidays in Asia this week

-No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens +0.2% at 9,168.

-(AU) Australia July Final Services PMI: 53.6 v 53.0 prelim (Confirms 2nd month of expansion).

-(NZ) New Zealand Q2 Unemployment Rate: 5.6% v 5.4%e [highest since 2015].

-(AU) Australia sells A$1.0B v A$1.0B indicated in 3.75% Apr 2037 bonds ; Avg Yield: 4.9738% v 4.9884% prior; bid to cover 3.02x v 3.62x prior.

-(AU) ACCC [Australia competition regulator] seeking regional mobile coverage across Australia, and whether to regulate.

-(AU) Australia to cut prices for rooftop solar for factories – AFR [update].

-(NZ) New Zealand July ANZ Commodity Price M/M: -3.9% v -1.1% prior.

China/Hong Kong

-(CN) Shanghai Composite opens -0.2% at 3,815; (HK) Hang Seng opens +0.1% at 25,891.

-(CN) China July ratingdog services PMI: 50.4 V 53.7E (lowest since September, 2024).

-(CN) China's northern power grids reportedly hit record power loads due to heatwave.

-(CN) China temporarily approves refined fuel exports for August at ~2.7Mt [excl. Hong Kong and bonded jet fuel refueling] - financial press.

-(CN) During H2, China to roll out additional measures to increase consumption [inline] – China Securities Journal.

-(CN) China AI agent unicorn LovArt said to consider Hong Kong IPO.

-(CN) China PBOC sets the yuan mid-point at 6.7889 v 6.7917 prior (strongest level since Feb 10th, 2023).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY5B in 7-day Reverse Repos; Net drains CNY202B v drains CNY559B prior.

-(HK) Hong Kong July PMI (whole economy): 51.0 v 52.0 prior.

Japan

-(JP) Nikkei 225 opens +1.0% at 64,580.

-(JP) Japan Jun labor cash earnings Y/Y: 3.4% V 3.4%E; real cash earnings Y/Y: 1.6% V 1.6%E.

-(JP) BOJ Jun Minutes (2 decisions ago): Many members said BOJ must be more mindful than before of upside price risks (inline with Summary of Opinions).

-(JP) BOJ: Long term interest rates being driven by markets more freely compared to the past as bond tapering occurs [EU market close].

-(JP) Japan July Final Services PMI: 51.2 v 51.9 prelim (confirms 21st month of expansion).

-(JP) Japan Chief Cab Sec Kihara: No comment on foreign officials comment, when asked about Bessent's comment on Yen.

-(JP) Japan oil refinery operating rate 88.6% in week to August 1st 27th v 81% to June 27th.

-(JP) BOJ Outright Bond Purchase Operation for <1 Year; 1~3 Years; 10~25 Years; (Inline with planned amounts for Q2, 2026).

-(JP) Bank of Japan (BOJ) Results related to today's outright bond buying operations.

Korea

-(KR) Kospi opens +3.8% at 6,603.

-(KR) South Korea July Foreign Reserves: $428.0B v $427.4B prior [US market close].

-(KR) South Korea Finance Ministry confirms to hike 2027 minimum wage by +3.7% to KRW10,700/hour.

-(KR) South Korea prosecutors investigates seven petrochemical companies over 'alleged' price collusion; the cos. were not named - Media.

-(KR) Korea Exchange activates sidecar following Kospi rising by +5%, programme trading halted for five-minutes.

-(KR) North Korea warns of military options over Japan's expanding defense - KCNA.

-(KR) SKHY Co., Samsung said to be testing AMEC's (Advanced Micro Fabrication Equipment 688012.CN) chip tools at China plants - US financial press.

Other Asia

-(IN) India central bank (RBI) Leaves repurchase rate unchanged at 5.25%; as expected.

-(IN) India July Final Services PMI: 53.3 v 53.1 prelim (confirms 60th month of expansion).

-(IN) RBI Gov Malhotra: Trade uncertainty lingers due to US tariffs - poat-rate decision comments.

-(SG) Singapore Jun Retail Sales M/M: +1.0% v -2.2% prior; Y/Y: 4.0% v 4.2%e.

-(SG) Singapore July PMI (whole economy): 59.2 v 57.4 prior.

-(PH) Philippines July CPI M/M: 0.1% v 0.3%e; Y/Y: 6.2% v 6.4%e.

-(PH) 6.3 mag earthquake strikes Mindanao, Philippines - GFZ.

-(TH) Thailand July CPI M/M: -0.7% v -0.2%e; Y/Y: 2.0% v 2.4%e.

-(TH) Thailand rules out fully owned SpaceX venture in the trade talks with the US – US financial press.

-(ID) Indonesia Q2 GDP Q/Q: 3.7% v 3.6%e; Y/Y: 5.3% v 5.1%e.

-(TW) Taiwan plans NT$3.6T ($111B) budget for 2027 without new borrowing – Local press.

-(MY) Malaysia is seeking to insulate its farmland from AI and chipmaking ‘booms’ – US financial press.

North America

-(US) Jun jolts job openings: 7.36M V 7.45ME [US market close].

-(US) President Trump: The Strait (of Hormuz) is going to be open very soon - RNC Reception, Trump National Golf Club Los Angeles [In-Town Pool].

-(US) House China panel report: Exposes the Chinese Communist Party's (CCP) infiltration and weaponization of Americans' communications and networks.

-(US) White House expected to extend the Jones Act waiver in coming days - press [US market close].

-(US) Jun trade balance: -$73.3B V -$73.0BE [US market close].

-(US) Jun factory orders: -0.3% V 0.2%E [US market close].

-(US) Jun final Durable Goods Orders: 0.5% V 0.3%E; durables (ex-transportation): 0.7% V 0.6%E [US market close].

-(US) Treasury Sec Bessent: Japan making serious efforts to stem devaluation in Yen currency - CNBC [US market close].

-(US) Trump Admin reportedly prepares to set price floor and tariffs on imports of poly-silicon and derivative products in chips and solar panels – press [US market close].

-(US) CDC expands cyclospora outbreak to 6 new states to now total of 15 US states - Washington Post [US market close].

-(US) White House excluding open models from its framework to test advanced AI capabilities - press.

-(US) Fed's Schmid (hawk; non-voter in 2026): Tighter policy needed to return inflation to 2% target; My primary concern is inflation.

-(US) Weekly API Crude Oil Inventories: +2.7M v +3.3M prior.

-(US) Treasury Sec Bessent: Uptick in Japan's inflation was result of weak yen, energy prices.

-(US) Colorado Health Department probing Salmonella Javiana outbreak with the CDC, FDA; Part of multistate Salmonella outbreak.

-(US) Federal aviation officials said to be reviewing an air-traffic safety incident earlier today (Tues) involving a military helicopter carrying Pres Trump - WSJ.

-(US) California drought has now caused ‘irreversible’ damage to crucial aquifer; the article refers to the aquifer system in Sacramento Valley - Press.

-(US) Sec of State Rubio to meet with UK Foreign Sec Miliband at 10 am ET.

-(CA) Canada Jun int'l merchandise trade (CAD): 3.9B V 3.0BE [US market close].

-(BR) Brazil reportedly to downgrade diplomatic relations with Argentina - Brazil media.

-(CO) Colombia Central Bank publishes monetary policy report: raises 2026 inflation forecast to 6.9%.

Europe

-(IT) Italy Jun Retail Sales M/M: -0.1% v +0.2% prior; Y/Y: 3.1% v 2.2% prior [EU market close].

-(FR) France Jun YTD Budget Balance: -€106.8B v -€93.3B prior [EU market close].

-(ES) Spain July Unemployment Change: +19.5K v -28.7K prior [EU market close].

-(UK) Jul New Car Registrations at 156K units, +12% y/y.

Middle East

-(IR) QATAR Foreign Ministry official: Language has been drafted on possible US-Iran deal; efforts ongoing to potentially reach a deal [US market close].

-(IR) Treasury Secretary Bessent: We may have Iran deal tomorrow to open Hormuz – CNBC [US market close].

-(IR) Follow up: US nears Strait of Hormuz deal, 'aiming' for Wednesday announcement [August 5th, 2026] - Axios.

-(IR) Iran Foreign Min: Talks with Oman have been positive at both the technical and political levels [US market close].

-(IR) Iran reportedly considers Europe to clear mines in the Strait of Hormuz - press [US market close].

-(IR) CENTCOM: US has assisted over 1,000 ships in transiting the Strait of Hormuz.

-(IR) Iranian State Media [citing informed sources]: Strait of Hormuz agreement with Oman will be delayed as long as US continues to threaten Iran.

Levels as of 01:20 ET

Nikkei 225 +3.5%; ASX 200 +0.8%; Hang Seng flat; Shanghai Composite +1.5%; Kospi +4.4%.

Equity S&P500 Futures +0.4%; Nasdaq100 +0.3%; DAX +0.7%; FTSE100 +0.2%.

EUR 1.1541-1.1527; JPY 157.81-157.31; AUD 0.7056-0.7040; NZD 0.5901-0.5866.

Gold +1.5% at $4,139/oz; BTC +1.1% at $64,540; WTI Crude Oil -0.9% at $75.10/bbl; Copper +0.2% at $6.6468/lbs.