Trump 10% hit on BRICS amid focus on July 9th US trade deals

Asia market update: Trump 10% hit on BRICS amid focus on July 9th US trade deals + new Aug 1st tariffs for at least 12 countries; OPEC+ increases output again; Focus on RBA Rate Decision tomorrow.

General trend

- US equity FUTs opened and stayed down -0.3% to -0.5% after the long US holiday weekend and following fresh record highs during Thursday’s US trading, seemingly not overly concerned about the possibility of significantly higher tariffs on some major US trading partners as Pres Trump on Friday said he signed 12 letters to various countries [unnamed] to be sent on Monday, July 7th from 12pm ET, ranging from "60-70%" or "10-20%". Countries to start paying the new tariffs on Aug 1st, which provides a window for further negotiations.

- THEN, Pres Trump posted out a ‘no exceptions’ extra 10% tariff on all BRICS nations that “align themselves with its ‘anti-American’ policies”.

- China offshore Yuan fell steeply back into 7.17 handle after Trump’s BRICS' announcement.

- Commodity currencies Kiwi and Aussie -0.6% to -0.7% amid tariff uncertainty. Most Asian currencies also down v USD, including USD/JPY again approaching 145 handle.

- Asian stocks mirrored US equity FUTs, down moderately in most markets.

- Oil opened down -1.0% after OPEC+ delegates agreed to accelerate raise of oil production to 548K bpd (from prior 411K bpd) in August. Pared back nearly half of the fall during the session.

- Silver briefly broke through recent highs to reach $37.40 at the Asia open, but soon pared gains.

Other trade news

- Thailand and Indonesia attempting to wrap up their trade talks with US.

- Reportedly US plans to restrict Nvidia and other AI chip shipments to Malaysia and Thailand.

- India said to propose retaliatory duties at WTO against US tariffs on auto parts.

- Switzerland may receive preferred treatment in ongoing US national-security investigations to avoid tariffs on pharma exports.

- China imposed lower tariffs on EU brandy (up to 35% for five years) than had been feared by the EU and France’s big cognac makers will be exempt provided they sell at a “minimum price” (yet to be specified].

Further news

- Japan labor cash earnings fell at the fastest pace in nearly two years, but one-off bonuses may have seen the market see through the results somewhat, with Japan 20 year JGB yields +4bps ahead of the 20-year auction on Thurs, July 10th, amid a general steepening of the curve at the long-end during the Japanese bond session, 30-yrs +5bps, 40-yrs +6bps.

- BRICS Summit (without Pres Xi Jinping's attendance for the first time since he assumed power in 2012) was held in Brazil, with the Statement proclaiming to be “In defense of a rules-based multilateral trading system, rejecting unilateral, punitive and protectionist measures”.

- Nissan issues build as companies considers letting Foxconn produce its own EVs at one of its plants in Japan in order to help save it from closure, company also to raise ¥150B in offshore bonds, stock -4%.

- Musk-Trump spat worsens again, with Musk saying he will indeed form his "America Party", and may run a Presidential candidate, while Trump called Musk's political foray, 'ridiculous'. Reports that Musk's various boards not happy with the fresh distractions.

- South Korea prelim Q2 results in focus: LG Energy beats, LG Electronics misses; Samsung Electronics tomorrow.

- US equity FUTs -0.4% to -0.5% during Asian trading.

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

- Tue July 8th Samsung Q2 prelim, AU Jun Business Confidence, AU RBA Rate Decision.

- Wed July 9th CN Jun CPI, RBNZ Rate Decision, (Wed night US FOMC Minutes).

- Thu July 10th KR BOK Rate Decision.

- Fri July 11th NZ Jun Business PMI, SG Q2 GDP.

- Sat July 12th CN Jun Trade Balance.

Holidays in Asia this week

- Thurs July 10th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 8,599.

- Australia Jun ANZ-Indeed Job Advertisements M/M: +1.8% v -0.6% prior.

- Australia PM Albanese to address Darwin port sale on his China visit - SCMP.

- NZIER: Monetary Policy Shadow Board: Recommends to hold rates in July [July 9th].

Hong Kong

- Hang Seng opens -0.4% at 23,828; Shanghai Composite opens -0.1% at 3,467.

- China Securities Journal: China A-share companies said to show signs of earnings recovery, with >70% of 54 companies surveyed said to expect H1 earnings improvement.

- Bytedance said to be building new version of TikTok app for US users - financial press.

- Hong Kong Monetary Authority (HKMA) said to have sold HK$29.6B to defend FX peg on July 3rd, third intervention in a week (currently upper-end of band at HK$7.85) - update.

- Bytedance: US President Trump said the US will start talks with China on TikTok on Mon or Tues – Nikkei [weekend update].

- China PBOC seeks view on CNY cross-border payment system – press [weekend update].

- Reportedly Chinese authorities requires solar companies to report their costs and may “severely” punish those who sell their products at prices lower than their costs – press [weekend update].

- CAICT: May Shipments of foreign branded phones [including Apple's iPhones] within China at 4.54M -9.7% y/y [weekend update].

- China MOFCOM: Issues final ruling on EU brandy probe; To impose up to 34.9% duties on EU brandy imports from July 5th for 5 years [weekend update].

- China PBOC sets Yuan reference rate: 7.1506 v 7.1535 prior (strongest since Nov 8th, 2024).

- China PBOC Open Market Operation (OMO): Injects CNY107B in 7-day reverse repos; Net drains CNY225B v drains CNY492B prior.

Japan

- Nikkei opens -0.2% at 39,750.

- Japan May labor cash earnings Y/Y: 1.0% V 2.4%E (falls at fastest pace in nearly two years).

- Japan Jun Total Reserve Assets: $1.31T v $1.30T prior.

- Japan tariff negotiator Akazawa held ‘in-depth’ phone talks with US Commerce Sec Lutnick on Thurs. and Sat.; cites comments from Japan government – Nikkei [weekend update].

- Japan LDP ruling bloc and opposition parties seen tied heading into Japan upper house elections [Jul 20th (Sun)] – Japanese press [weekend update].

- Considering to let Foxconn produce its own EVs at Nissan's Oppama plant (Yokosuka) to save it from closing - Nikkei (weekend update).

Korea

- Kospi opens -0.3% at 3,044.

- LG Energy: Reports Q2 prelim (KRW) Op 492B; Rev 5.57T v 5.84Te.

- LG Electronics: Reports Q2 prelim (KRW) Op 639B, -47% y/y; Rev 20.7T v 21.6Te.

- South Korea to give away KRW152.1B in loans to firms cutting carbon emissions - financial press.

Other Asia

- Thailand Jun CPI M/M: 0.0% v 0.1%e; Y/Y: -0.3% v -0.1%e.

- Vietnam Trade Ministry: Anti-dumping tariff on China hot-rolled steel effective for 5 years, with tariffs 23.1% to 27.8% - financial press.

- Follow up: Thailand Fin Min Pichai: Revised trade proposal now submitted to the US - financial press.

- Follow up: Indonesia main trade rep to visit US on July 7th (today) - Indonesia official.

- Indonesia Wheat Flour Association: To sign MOU on Mon to buy at least 1Mts of wheat from the US per year between 2026-2030 - Chairman's statement.

- BRICS Summit Statement: “In defense of a rules-based multilateral trading system; Rejecting unilateral, punitive and protectionist measures” - statement from Rio, Brazil.

- Nvdia: Reportedly US plans to restrict shipments of AI chips from the likes of Nvidia to Malaysia and Thailand – press.

- Hon Hai (Foxconn) 2317.TW Reports Jun (NT$) Rev 540.2B, +10.1% y/y.

- Taiwan Semiconductor: Reportedly to delay Japan chip plant construction and focus on US in bid to avoid Trump tariffs - WSJ.

- (IN) India reportedly proposes retaliatory duties at WTO against U.S. tariffs on auto parts – statement.

- Reportedly US plans to restrict shipments of AI chips from the likes of Nvidia to Malaysia and Thailand – press.

- Thailand Fin Min Pichai: Trade talks with US not concluded yet; To adjust trade proposals for more clarity.

- Taiwan said to be in talks with custodian banks on foreigners buying stocks – press [weekend update].

- Indonesia Chief Economy Min: Indonesia has offered near zero percent tariff to 20 main US exports; Indonesia to offer US companies opportunities to invest in critical mineral projects; Econ Min Hartarto: To sign a MoU with US on trade on July 7th; To sign goods purchase, invest deal with US worth $34B [weekend update].

North America

- President Trump: Confirms tariff letters and trade deals will be delivered on Jul 7th [Mon] at 12:00 PM ET [specifies the time]; any country aligning themselves with 'anti-American' policies of BRICS, will be charged an additional 10% tariff, there will be 'no exceptions' to this policy.

- (US) Pres. Trump: I am saddened to watch Elon Musk go completely “off the rails,” essentially becoming a TRAIN WRECK over the past five weeks - Truth Social post.

- (US) President Trump: Will have deal or letter with most nations done by Jul 9th - press gaggle prior to boarding flight.

- Elon Musk confirms he will form the "America Party" as a third party in US politics - financial press.

- (US) Commerce Sec Lutnick: Confirms tariffs 'go into effect' on Aug 1st - financial press.

- (US) Pres Trump signs OBBBA (One Big Beautiful Bill Act) into law at the White House [weekend update.

- (US) Fed futures now price 66% chance for 25bps cut by Sept's meeting v 95% before US jobs report [weekend update].

- (US) Truflation proxy of US aggregated inflation index again drop to 1.99% (lowest since early June) from 2.3% and 1.4% before Liberation Day [weekend update.

- Elon Musk: Independence Day is the perfect time to ask if you want independence from the two-party (some would say uniparty) system; One way to execute on this would be to laser-focus on just 2 or 3 Senate seats and 8 to 10 House districts [weekend update].

Europe

- EU said to be 'holding back' on climate action pact with China - FT.

- OPEC+ delegates agree accelerate raise of oil production to 548K bpd (from 411K bpd) in August.

- (IL) Follow up: Hamas says ready to engage immediately in negotiations for implementing US-brokered Israel ceasefire; Handed over 'positive response' to mediators - financial press [weekend update].

- (US) Reportedly US Pres Trump told Ukrainian Pres Zelenskiy in a call on Friday that the U.S. wants to help Ukraine with air defense, due to escalating Russian attacks – Axios [weekend update].

- (US) Reportedly draft of a US trade accord contains a provision that Switzerland will receive preferred treatment in the ongoing national-security investigations to avoid tariffs on pharma exports - press [weekend update].

- (UK) BOE's Taylor (dovish dissenter): BOE should cut interest rates as a form of “insurance” against a deteriorating economic backdrop; A long way to go to get to neutral rates; Sees key rate "normalizing" at close to 2.75% [weekend update].

Levels as of 01:20 ET

- Nikkei 225 -0.6%, ASX 200 -0.1%, Hang Seng -0.3%; Shanghai Composite -0.2%; Kospi +0.3%.

- Equity S&P500 Futures -0.4%; Nasdaq100 -0.5%; DAX +0.2%; FTSE100 +0.2%.

- EUR 1.1763-1.1791; JPY 144.23-145.07; AUD 0.6501-0.6565; NZD 0.6007-6063.

- Gold -0.8% at $3,319/oz; Crude Oil -0.3% at $66.30/bbl; Copper -1.0% at $5.0138/lb.