KR-JP chip-related carnage continues, Mid-East gets kinetic again, JP earthquake fallout

Asia Market Update: KR-JP chip-related carnage continues; Mid-East gets kinetic again; JP earthquake fallout; FOMC tonight (BOE Thu, BOJ Fri); with META, MSFT after Wed close.

-“Carnage” is the only way to describe Korea’s Kospi index over the past two days, with today’s -12% plunge at its worse even darker than yesterday’s -11% losses. Kospi at 5,300 barely recognizable from its 9,250 peak just back in June. [Note: at time of writing losses pared to -8%]. SK Hynix -14% losses today even worse than the -13% lost yesterday, despite today’s record-breaking Q2 earnings and revenues for Hynix, although still missing lofty analyst expectations - underscoring how hard it is for some of the past year’s AI stars to outperform the market’s stratospheric expectations for them. -Samsung also -9% (-12% yesterday),

** Note that one of the core reasons for extreme volatility in the Kospi index itself is the extreme over-weighting of Hynix and Samsung; Samsung at ~27.5% and SK Hynix at ~23.6% hold a combined >50% of the entire Kospi - exacerbated since late May by the introduction of 18 single-stock ETFs based on the two memory-makers’ name, some of those ETFs being double-leveraged.

-However chip-relateds were also hammered for a second-day running in Japan, with Tokyo Electron -12% (-11% yesterday), Kioxia -14% (-18% yesterday), Softbank -10% (-6% yesterday). However, the Nikkei 225 overall much less damaged, down “only” -2.7% to add to yesterday’s -4% fall. Taiwan’s Taiex also notably down more than -5%, coming amid the nation’s state stabilization fund saying it will continue to monitor stock market and measures of financial regulators.

-Nasdaq FUTs relatively unscathed, pulled down -1% by Asian chip-relateds but managing to maintain the floor of the overnight US session. Notably during the US session as well US semi-stocks initially followed the prior day’s Kospi crash, but then recovered to nearly flat, while the Dow was up 1%, just shy of its recent all-time highs; Further evidence of the current rotation out of AI into seemingly “anything but AI”.

-Middle East shooting starts up again: During the one-hour downtime for Oil trading, Iran was reported to have rejected Oman’s proposal to share the Strait of Hormuz, one of the factors underpinning oil’s extra decline over the past day or two. That, combined with the late US-afternoon surprise drone attacks on Saudi oil facilities, which US CENTCOM and Saudi Arabia retaliated against by striking “Iran-directed terrorists in Iraq”, saw WTI crude FUTs spike back up +4% to as high as $82/bbl shortly after the post 6pm ET resumption of oil trading. The IRGC also claimed that three oil tankers were 'struck and stopped' after ignoring warnings in the Strait of Hormuz.

-US-China trade relations get sticker ahead of Pres Xi’s planned trip to the US in late September, as the Trump Admin intends to target China by rolling out bans on foreign imports of new models of robots and inverters, an action that China MOFCOM snapped back against today.

-Significant fall-out from the major earthquake in southern Japan’s Kumamoto, with a large number of Japanese corporates - including Tokyo Electron and Taiwan’s TSMC - closing factories for inspection amid at least 13 deaths reported thus far. Aeon Mall and Nippon Paper at minimum report missing people.

-Slightly softer June and Q2 CPI in Australia maybe cements the likelihood of RBA holding rates on Aug 11th, that along with yesterday’s comments by Gov Bullock on “soft housing” conditions sees market expectations still in the 70-80% range.

-New Zealand First leader Winston Peters called for the return of the RBNZ dual mandate to include jobs again; the minority party’s announcement having extra bite given Peters’ typical king-making role in any ruling coalition due to New Zealand’s Mixed Member Proportional voting system, with the party polled to win 12-15% at the October general election.

-Aussie miner Rio Tinto +4% as it reported strong first-half 2026 results with big jumps in profit and EBITDA, driven by higher copper and aluminium prices.

-Much focus after the US Wednesday close will be on Microsoft and META earnings, along with Qualcomm. Notably just prior to the releases, META CEO Zuckerberg said that the US should not block Chinese AI...

-FOMC odds for tonight remain at about a 1/3 chance of a hike, largely unmoved over the day before. UK BOE follows on Thursday, and Japan’s BOJ on Friday.

-US equity FUTs -0.5% to -0.1% during Asia trading.

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

-Wed July 29th: (Wed night, US Fed Rate Decision).

-Thu July 30th: NZ July ANZ Business Confidence, EU Prelim Q2 GDP, (Thu night, UK BoE Rate Decision, US Jun Core PCE, Prelim Q2 GDP).

-Fri July 31st: KR Jun Industrial Production & Retail Sales, JP July Tokyo Core & CPI, JP Jun Retail Sales & Prelim Industrial Production & Unemployment Rate, AU Q2 PPI, CN July PMIs, JP BoJ Rate Decision, TW Prelim Q2 GDP, HK Prelim Q2 GDP, EU Prelim Jul CPI.

-Sat Aug 1st: OPEC Meeting.

Holidays in Asia this week

-Tue July 28th: Thailand.

-Wed July 29th: Thailand.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens +0.7% at 9,009.

-(AU) Australia Q2 CPI Q/Q: 0.6% v 0.7%e.

-(AU) Australia Jun CPI M/M: -0.1% v +0.2%e; Y/Y: 3.8% v 4.0%e.

-(NZ) New Zealand First leader Peters calls for return of RBNZ dual mandate (comes ahead of October general election).

-(AU) ACCC [Australia competition regulator] has not objected to Australia Post’s proposed stamp price increase of 8.8 per cent after finding Australia Post would likely not cover the costs of delivering its reserved letter services, even with the higher stamp price.

-(NZ) New Zealand RBNZ: Bought net NZ$572M in June v Sold net NZ$252M in May.

-(NZ) New Zealand may purchase long-range on-way strike drones.

China/Hong Kong

-(CN) Shanghai Composite opens +0.3% at 3,823; HK) Hang Seng opens +0.7% at 25,487.

-(CN) Trump Administration intends to roll out bans on foreign imports of new models of robots and inverters today, targeting China - US officials [US market close].

-(CN) 688825.CN Senior bipartisan US lawmakers push for probe of CXMT on suspicions that China govt orchestrated the memory chipmakers IPO to prop up a key military asset - NY Post [EU market close].

-(CN) Follow up: China Commerce Ministry (MOFCOM): Urges US to stop "smearing" Chinese technology institutions; Urges US to correct mistakes.

-(CN) China Commerce Ministry: Held phone call with the UK Trade Secretary.

-(CN) Chinese Foreign Min Wang 'likely' to visit South Korea next month for talks on bilateral issues, North Korea - Yonhap.

-(CN) Provinces in China to focus on investments related to AI and new energy; cites the investment plans of multiple provinces – Chinese press.

-(CN) China PBOC sets the yuan mid-point at 6.7899 v 6.7928 prior (strongest since Feb 10th, 2023).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY207B in 7-day Reverse Repos; Net injects CNY731B v injects CNY53B prior.

-(HK) HKMA confirms lends HK$279M to banks through discount window on Jul 28th.

Japan

-(JP) Nikkei 225 opens +0.7% at 62,735.

-(JP) Japan Chief Cab Sec Kihara: Power, gas among utility supply issues in Kumamoto.

-(JP) Japan LDP official Onodera: Important to reduce food sales tax to 1%, use handouts.

-(JP) GPIF said to have boosted JGB expertise back in May by employing three active bond funds.

-(JP) Follow up: Another confirmed dead at Kumamoto shopping mall - Nikkei.

-(JP) BOJ Outright Bond Purchase Operation for 3~5 Years; >25 years and inflation-indexed bonds; (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 +1.1% at 6,089.

-(KR) Bank of Korea: To continue making market stabilizing efforts.

-(KR) South Korea Fin Min Koo: Reiterates South Korea seeks to stabilize H2 inflation under 3% [the inflation target is 2.0%] - Parliamentary Comments.

-(KR) South Korea Jun Retail Sales Y/Y: 9.5% v 9.0% prior.

-(KR) Korea Exchange activates a circuit breaker following Kospi index falling by -8%, program trading halted for twenty-minutes; Hynix continues to drive volatility after reporting Q2 earnings.

-(KR) Korea Exchange activates a circuit breaker on the Kosdaq following Kosdaq index falling by -8%, programme trading halted for twenty-minutes.

-(KR) Korea Exchange activates sidecar following Kospi 200 FUTs falling by -5%, programme trading halted for five-minutes.

-(KR) Korea Exchange activates sidecar on Kosdaq following Kosdaq 150 FUTs falling by -6%, programme trading halted for five-minutes.

Other Asia

-(ID) Bank of Indonesia (BI) Exec Dir Hutapea: Committed to maintain stability and support economic growth.

-(MY) Malaysia's Deputy Finance Minister Tong: To consider reintroducing GST once median monthly wage reaches MYR4,000 - Comments in the Upper House of Parliament.

-(TW) Taiwan Finance Ministry: State stabilziation fund will continue to monitor stock market, measures of financial regulator.

-(VN) Vietnam detains Deputy Agricultural Minister in durian export probe [the specific reason was not initially disclosed] - US financial press

-(PH) Moody's: Philippines' tax plan may delay its fiscal consolidation.

North America

-(US) Trump Admin to end the Medicare drug plan subsidy program that restrained premiums for Part D plans after 2026; Trump Admin says the subsidies are no longer needed; Move will result in higher costs for some senior citizens in 2027 - WSJ [US market close].

-(US) July Consumer Confidence: 90.8 v 92.4e (US) July Richmond Fed Manufacturing Index: 5 v 6e (US) May S&P Cotality House Price Index (20-city) M/M: 0.15% v 0.00%e; Y/Y: 1.63% v 1.30%e (US) May FHFA House Price Index M/M: 0.3% v 0.1%e [US market close].

-(US) Treasury $44B 7-Year Note Auction draws 4.473% v 4.260% prior, bid-to-cover ratio: 2.49x v 2.50x prior and 2.60x over the last 12 auctions [US market close].

-(US) July Richmond Fed Manufacturing Index: 5 v 6e [US market close].

-(US) Pres Trump: Great Honor to meet with President Zelenskyy of Ukraine. Many things were discussed. The meeting went very well! - Post on Truth Social.

-(US) Pres. Trump: Prime Minister Bibi Netanyahu of Israel, along with myself and Representatives. Had a very good meeting!.

-(US) President Trump to make announcement with US Transportation Secretary Duffy at 3pm ET on Wednesday 29th July, 2026.

-(US) Pres. Trump: Senator Ron Johnson is working hard with Senate Republican Leadership to adopt a Budget Resolution before August recess - post on Truth Social.

-(US) US Senate confirms Jay Clayton as Director of National Intelligence; Vote 51 to 47 along party lines - WSJ.

-(US) METACEO Mark Zuckerberg: US should not block Chinese AI - FT.

-(CL) Chile Central Bank (BCCH) leaves overnight rate target unchanged at 4.50%; As expected; Unanimous Decision.

Europe

-(RU) Former Russian Pres Medvedev: Russia has no need for another mobilization; ~200K people signed military contracts in H1 2026.

-(RU) Russia sanctions bill clears the procedural senate vote - US financial press.

-(UR) President Zelenskyy: Putin doesn't want to stop this war - Fox News Interview.

-(UK) London Times Shadow MPC voted 7-2 for the BOE to hold rates at 3.75% – Press [update].

-(UK) NIESR [think tank] sees UK inflation returning to 2% target in 2029 , sees CPI peaking at 3.8% in early 2027 – Press [update].

-(ES) Spain Jun Adjusted Retail Sales Y/Y: 0.5% v 1.3% prior; Retail Sales (unadj) Y/Y: +2.4% v -0.3% prior [EU market close].

-(ES) Spain Q2 Unemployment Rate: 9.9% v 10.1%e [EU market close].

-(FR) France July Consumer Confidence: 86 v 85e [EU market close].

-(DK) Denmark Jun Retail Sales M/M: 0.5% v 1.0% prior; Y/Y: 4.8% v 3.7% prior [EU market close].

Middle East

-(IR) Iran launched ballistic missiles towards a US base in Jordan - Axios reporter on X [citing US official].

-(IR) Iran said to have ‘rejected’ Oman proposal to share the Strait of Hormuz - WSJ (update).

-(IR) Iran Foreign Minister: Has not sought US talks in the past 16-17 days - Iranian press [US market close].

-(IR) Markets react to Fox News retread of an overnight Times of Israel article that says sources indicate Middle East mediators are getting closer to resurrecting the US/Iran MOU [US market close].

-(IR) Pres Trump: Will go back and finish the job if no Iran deal; We’ll take out 'pickaxe' mountain ‘very easily’ if no deal; Iran came out and said we are talking - Fox News [US market close].

-(IR) US CENTCOM: US Forces remain vigilant and at a high state of readiness - post on X.

-(IR) IRGC: Three oil tankers were 'struck and stopped' few hours ago after ignoring warnings in Strait of Hormuz.

-(IR) President Trump: Reiterates Iran wants to make a deal so badly - speaks on a Tele-Rally.

-(IR) CENTCOM: US, Saudi forces struck against multiple Iran-backed terrorist, weapons sites in Iraq; In retaliation for IRGC-directed drone attacks from Iraq.

-(IR) Follow up: Iran denies role in attack on Saudi facilities on Tuesday [28th July, 2026] - IRIB.

-(IR) IRGC: Confirms fired ballistic missiles US air base and US military central command center in Jordan - Iranian State TV.

Levels as of 01:20 ET

Nikkei 225 -1.6%; ASX 200 +1.1%; Hang Seng +1.3%; Shanghai Composite +0.4%; Kospi -6.7%.

Equity S&P500 Futures -0.1%; Nasdaq100 -0.5%; DAX -0.4%; FTSE100 -0.1%.

EUR 1.1404-1.1382; JPY163.88-163.28; AUD 0.6981-0.6938; NZD 0.5793-0.5775.

Gold flat at $4,030/oz; BTC +0.8% at $63,982; WTI Crude Oil +3.4% at $81.94/bbl; Copper -0.3% at $6.3170/lbs.