Nikkei falls from record high, HSI erases gain

Asia market update: Asian equities diverge; Nikkei falls from record high, HSI erases gain; Bessent continues to talk rates amid focus on yield divergence; 2-yr JGB yield rises; DeepSeek delay.

General trend

- USD/JPY: Declines to the lowest level since Jul 24th.

- Japan 2-year JGB yield rises by 2.9bps to 0.814%.

- Aug 13th (NY morning): (US) Treasury Sec Bessent: Reiterates there is good chance of 50bps cut, hopeful about Sept meeting; think we could go into a series of rate cuts; We should be 150-175bps lower on Fed's rate now; Japan needs get their inflation problem under control; There was a leakage from Japan; I have spoken with BOJ Gov Ueda.

- USD/JPY basis swap declines to 3-year low; notes US rate cut speculation – Nikkei.

- Possibility for ‘big’ FOMC cut? [https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html].

- DeepSeek: Follow Up: The co's launch of new AI-model said to be delayed by Huawei 'chip issues' - FT [**Reminder Jun 26th: Reportedly DeepSeek progress has been stalled by US export controls, which may delay China's adoption of DeepSeek's next model, R2 - The Information].

- China 30-year Bond FUTs decline by 0.5% amid equity gains.

- China MOF sells 20-year ultra-long special Bonds: Yield 2.0596% v 1.9200% prior.

- China 'urged' by think tanks to strengthen yuan (CNY) - US financial press.

- Hong Kong Monetary Authority (HKMA) buys HK$3.4B to defend currency peg.

- Analysts debate whether a Sept RBA rate cut is needed amid jobs data.

- Asian countries also continue to report earnings: Tencent rises, Lenovo drops.

- Geely [175.HK]: Reports H1 (CNY) Net 9.29B, -14% y/y; Rev 150.3B, +27% y/y; Despite fierce market competition, affirms given our strong sales volume in the first half of the year, the Group has decided to raise the annual sales target from 2.71 million units to 3 million units.

- China CSI Semiconductor Index up ~4.0%.

- S&P ASX 200 rises after results from Westpac.

- Japan Q2 Prelim GDP data due on Fri.

- On Fri (Aug 15th), US President Trump and Russia Putin meeting confirmed to be held at Anchorage (Alaska) military base - NYT [from Aug 12th].

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.5% at 8,869.

- Australia July employment change: 24.5K V 25.0KE; unemployment rate: 4.2% V 4.2%E; Hours worked rose 0.3 per cent in July, slightly higher than the monthly employment growth (+0.2%).

- Australia sells A$150M v A$150M indicated in 2035 indexed Bonds; Avg Yield: 1.9646%; bid-to-cover: 3.97x.

- RBNZ: Mean Household 2-year Inflation Expectation: 4.6% v 4.7% prior [**Note: RBNZ has target range of 1.0-3.0%].

- New Zealand sells NZ$450M v NZ$450M indicated in bonds.

China/Hong Kong

- Hang Seng opens +0.6% at 25,766.

- Shanghai Composite opens +0.1% at 3,685.

- China July YTD new Yuan loans (CNY): 12.87T V 13.22TE (1st contraction since July 2005).

- Lenovo [992.HK]: CEO: Notes 'limited' tariff impact on business currently; feels better about FY26 outlook than during the prior quarter; Chairman guides FY25 PC volume growth in the mid-to-high single digits.

- China PBOC sets Yuan reference rate: 7.1337 v 7.1350 prior [strongest Yuan fix since Nov 6th, 2024].

- China July M2 money supply Y/Y: 8.8% V 8.3% prior V 8.3%E.

- China consumer loan rates are likely to decline below 3.00% amid subsidy program; cites analysts - China Securities Journal.

- China MOF sells 20-year ultra-long special Bonds at 2.0596%.

Japan

- Nikkei 225 opens -0.4% at 43,100.

- BOJ Outright Bond Purchase Operation: Inline with planned amounts.

- Rakuten Bank [5838.JP]: Rakuten Bank will stop buying JGB until the BOJ raises rates again amid uncertain policy outlook - press.

Korea

- Kospi opens flat at 3,226.

- LG Display [034220.KR]: Shares remain volatile, decline by ~10% on session, after prior gain of >20%.

- South Korea sells 50-year Bonds: Avg Yield: 2.615%

- South Korea July Export Price Index M/M: +1% v -1.1% prior; Y/Y: -4.3% v -4.5% prior.

- South Korea to extend fuel tax cut by 2 months through Oct 31st; plans to announced policy on petrochem restructuring in Aug - Press.

Other Asia

- Taiwan to add ~NT$20B to support companies impacted by tariffs.

- Vietnam Central Bank (SBV) to cut the compulsory RRR by 'half' for certain banks; effective Oct 1st.

North America

- (US) President Trump to deliver remarks on Thurs. at 1:00 PM ET - Press.

- (US) DoE announces $1B for critical minerals security; Intends to issue notices of funding opportunities.

- XAI: XAI co-founder said to exit amid plan to start venture firm - CNBC.

- Codelco says the El Teniente smelter to restart on Thursday.

Europe

- (RU) US said to 'temporarily' ease certain financial sanctions on Russia ahead of Fri meeting between Trump and Putin - financial press.

- (UK) July RICS House Price Balance: -13% v -7% prior.

Levels as of 01:20 ET

- Nikkei 225 -1.4%, ASX 200 +0.5%, Hang Seng -0.4%; Shanghai Composite -0.2%; Kospi flat.

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

- EUR 1.1717-1.1699 ; JPY 147.39-146.33 ; AUD 0.6568-0.6542 ; NZD 0.5992-0.5971.

- Gold flat at $3,409 /oz; BTC +3.2% at $122,937; Crude Oil +0.5% at $62.94 /bbl; Copper flat at $4.4980/lb.