US trade tariffs back in focus: Nike dumps CN online sellers

Asia market update: US trade tariffs back in focus: Nike dumps CN online sellers; CN Foreign Min to meet US Rubio; Iran attacks continue amid glimmer of cessation; Google & Tesla earnings post-close.

General trend and developments

-Kospi up as much as +6% soon after the open (pared to +4% later), even as Hynix said Not to be in talks for Hynix to buy Intel’s Ohio plant. Nikkei solid, +1%. Shanghai only slightly up despite Beijing's coordinated market support ahead of the large CMXT IPO next week.

Note: Market Price Correlation Break: Gold (>$4130) and Silver ($60/oz) continue to rise this week, despite higher oil prices, higher bond yields and relative dollar strength in recent sessions, breaking correlations that have held for the past several months, particularly since the start of the US-Iran conflict in late Feb. Bitcoin also continues to trade better, pressing beyond $66K for first time in over a month.

- Amid a series of US trade-related announcements, generic drugs to receive some relief as Trump Admin clarified the timeline for the phasing out of zero tariffs on generic drug imports into the US, with the current 0% tariffs to continue until August, 2028, at which point a 100% tariff will be imposed for one year, and 200% thereafter.

- Pres Trump also poised to replace the July 24th expiring temporary Section 122 import surcharges of 10% with new, targeted tariffs between 10% and 12.5% on 60 countries, effective as soon as Friday, by targeting forced labor practices.

- US Treas Sec Bessent also threatened sanctions on open-source AI models involved in intellectual property theft, citing evidence of US LLM (large language model) watermarks in Chinese models.

- Regarding the threatened tariffs on Canada, reports that Pres Trump considering the infamous 1930 Smoot-Hawley Tariff Act to allege 'discrimination against US exports'; The statute has not been used since The Great Depression.

- Nike reportedly to dump thousands of online resellers in China from Jan 1st, 2027, consolidating to focus on large resellers such as Tmall (BABA), JD.com and Douyin (Bytedance). The move crushed Topsports International -24%, as 22% of its revenue is sourced from Nike. Fellow distributor Pousheng International -8% despite claiming Nike’s contribution to its profit is “insignificant”.

- Note that China Foreign Min Wang Yi to meet with US Secretary of State Rubio in Manila, Philippines 4pm local time at the latest ASEAN meeting, amid heightened tension on trade, AI and further altercations between China and the Philippines over the Second Thomas Shoal.

- US attacks on Iran barely more than 90 minutes in length on the 11th consecutive night of bombing, although attacks were dispersed over a wide area of Iranian territory. However, mediators are said to remain in contact with a 10-day cessation proposed and efforts to revive the interim deal. Pres Trump has also thus far held back on his US session threat to go after Iranian nuclear facilities.

-Trump also announced closer ties with Lebanon as he hosted its President Aoun at the White House, saying Lebanon had been “very badly treated” and lifted the 41 year ban on US airlines flying to Lebanon. [US appears to be stepping up to help as the Lebanese govt works with Israel to root Hamas out the country].

- Pres Trump also approved the landmark Saudi nuclear deal, initially proposed last November. To submit to Congress in the coming days.

- Beijing’s announcement to target 950 million users and 42% traffic share by 2030 shows it is attempting to build a foundational pillar for next-gen technologies such as the Internet of Things (IoT) and AI. [Note: The older IPv4 standard is nearly out of available IP addresses]. IPv6 would provide nearly endless IP addresses for every device (from traffic lights to home appliances) each of which could have its own direct, secure address, enhancing real-time data collection and management. If successful, China could set up its tech hardware and software to be in demand globally.

- Japan’s planned relaxing bank lending rules along with pushing asset-heavy Japanese pension funds into alternative assets is designed to fuel the govt’s economic growth targets, particularly in domestic chips, AI and energy. The intent is to drive domestic M&A activity, increase private equity financing and overall pile capital back into Japanese markets.

-Japanese yields again ticked back up as the Yen fell beyond 163 for the first time in 40 years. Japanese convertible bond issuance rose to a 22-year high on overseas inflows.

-Japan’s June trade deficit worsened on the weak Yen and increased costs from the Iran conflict, with imports outpacing even the strong level of exports. Note also that Japan’s SEAJ June Chip-making Equipment Billings +26.9% y/y.

-Korea producer prices (PPI) remained elevated at four-year high levels y/y.

-Australian production updates saw Beach Energy rise marginally higher despite missing volume forecasts, while Lynas Rare Earths fell -5% despite a revenue surge, sold off due to production misses and cost blowouts.

-Blackstone to invest $4.3B to build a new data center with Airtrunk in Australia.

-China PBOC finally ended an extend run of liquidity injections with a drain today, as the huge CXMT IPO book closed.

-Taiwan Semi set to raise prices next year by 10% for both for both advanced and mature chip production services. Compatriot Taiwan high tech co Wistron to also open a $700M AI facility in Fort Worth, TX to produce Nvidia Rubin Superchips.

- Later today, Indonesia Central Bank rate decision, (already raised by 100 bps since early June), another 25bps expected today, amid weak Rupiah currency.

- US session saw strong gains out of hardware again, with AMD +8%, Lenovo +7%, Intel +9% and Super Micro +12% across the entire day on much higher margins and record backlog in its prelim Q4 figures.

- Liquidity alert for Aug 4th as SpaceX set its debut Jun quarterly earnings on that date, which will trigger the first major share lock-up expiry for insiders, who will be able sell up to ~20% of their shares immediately.

- Google and Tesla to report after the close on Wed.

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

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

-Wed July 22nd: UK Jun CPI & PPI, ID Rate Decision.

-Thu July 23rd: KR Prelim Q2 GDP, AU Jun Jobs, SG Jun CPI, TW Jun Industrial Production, (Thu night, EU Rate Decision, EU Prelim July Consumer Confidence).

-Fri July 24th: Global Prelim July PMI’s, JP Jun CPI, UK Jun Retail Sales, (Fri night US Prelim July S&P PMIs, US Jun New Home Sales).

Holidays in Asia this week

-Mon July 20th: Japan.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens +0.1% at 8,805.

-(AU) Australia Jun Westpac Leading Index M/M: +0.04% v -0.08% prior.

-(AU) RBA survey shows inflation remains the top concern in Australia – US financial press.

-(AU) Australia Foreign Min Wong: Middle East conflict could deteriorate further without much warning - Remarks at ASEAN in Manila, Philippines.

-(AU) BX Finalizing a group of banks to underwrite a A$4.3B ($3B) loan for the construction of AirTrunk Pty.'s new data center in Australia.

-(AU) BPT.AU Reports Q4 (A$) Production 4.9MMboe v 4.6MMboe y/y; Rev 400M v 455M y/y.

-(AU) LYC.AU Reports Q4 (A$) Rev 288.9M v 170.2M y/y.

-(NZ) RBNZ: New Zealand Jun Credit Card Spending M/M: -1.3% v +1.8% m/m; Y/Y: 3.1% v 0.9% y/y.

China/Hong Kong

-(CN) Shanghai Composite opens -0.6% at 3,840; (HK) Hang Seng opens -0.6% at 24,979.

-(CN) China Foreign Min Wang Yi: China will continue to act with ASEAN with principle of peace, development, cooperation and mutual benefit - Remarks at ASEAN in Manila, Philippines.

-(CN) China has unveiled a plan to deepen technological innovation and integrated application of IPv6 (Internet Protocol version 6), targeting 950M active users and an IPv6 network traffic share of 42% by 2030 - press [EU market close].

-(CN) China seen to 'step up' fiscal spending in H2, 2026 - China Securities Times.

-(CN) MOFCOM: China's beef imports from Brazil reached 80% of quota.

-(CN) China Foreign Min Wang Yi: To deepen maritime ties with Malaysia - Remarks at ASEAN in Manila, Philippines.

-(CN) Foreign banks turn ‘upbeat’ on China A-shares – China Securities Journal.

-(CN) Zhongji Innolight: Confirms pricing of 54.5M H-shares at HK$1,010/H-share under global offering; Looks to raise ~$7B in largest HK listing in 7 years - Press.

-(CN) China name Hougdou Group to delay coupon payment on 9.89% Yuan-denominated bond.

-(CN) ROG.CH Exec: In order to do something different, you need to be embedded in China.

-(HK) Hong Kong tipped to approve hedge fund tax breaks, to attract investment and talent - SCMP.

-(CN) China PBOC sets the yuan mid-point at 6.7933 v 6.7917 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY76B in 7-day Reverse Repos; Net drains CNY351B v injects CNY17B prior.

Japan

-(JP) Nikkei 225 opens +0.3% at 66,435.

-(JP) Japan Jun trade balance: -¥406.9B V -¥120.0BE (Japan exports and imports grow at fastest pace since November 2022).

-(JP) Japan said to relax rules on bank lending for M&A and encourage pension funds to invest more in alternative assets - press [EU market close].

-(JP) Japan sells ¥299.8B V ¥300B indicated in 40-year jgb bonds; lowest accepted price: 3.8650% V 3.8400% prior; bid-to-cover: 2.82X V 2.70X prior (strongest bid-to-cover ratio since March, 2025).

-(JP) Japan govt reportedly considers raising gasoline subsidy threshold to 175 yen per liter in September from current 170 yen - press [EU market close].

-(JP) Japan Fin Min Katayama: Won't comment on specific Forex levels; Will take appropriate action on Forex as needed; Won't comment on specific FX levels; Will take action on FX whenever necessary; Our stance on FX hasn't changed.

-(JP) Japan Chief Cabinet Sec Kihara: Refrain from commenting on FX market situation; Japan maintains effective control over Okinotorishima

-(JP) Japan Jun Crude Steel output 6.80Mt, -2.1% m/m; +1.3% y/y.

-(JP) China Daily opinion piece: Decline in Japanese Yen ‘microcosm’ of mature economy in ‘structural decline’.

Korea

-(KR) Kospi opens +4.5% at 7,052.

-(KR) South Korea Jun PPI Y/Y: 8.6% v 8.5% prior.

-(KR) South Korea Vice Fin Min Huh Chang: Imbalances in FX market have eased; Have secured ample policy room to stabilize FX market if needed; Ample capacity to stabilize FX market.

-(KR) Korea exchange activates sidecar following the Kospi FUTs rising by more than +5%, programme trading halted for 5 minutes.

-(KR) South Korean Army denies reports it will deploy robot combat dogs - Statement.

Other Asia

-(SL) Sri Lanka Central Bank (CBSL) leaves Overnight Rate unchanged at 8.75%; as expected.

-(TH) Thailand Baht weakens to 33.74/USD, lowest level since late April 2025.

-(MY) Malaysia's Deputy Finance Minister Amir: Project MYR2B monthly subsidy for Ron95, MYR1.5B for diesel with crude at $90/bbl - Parliamentary Comments (Upper House of Parliament).

-(IN) India Foreign Min: [Towards China's Foreign Min Wang Yi] Important dimensions of our ties need to be addressed; fair market access and trade balance rank high - Remarks at ASEAN in Manila, Philippines.

-(IN) India Central Bank said to propose overhaul of foreign investment rules - US financial press.

-(IN) India Oil Ministry: to consider relief measures for state-run OMCs [oil marketing companies].

-(ID) Follow up: Indonesia head of new free meals program reported to resign.

-(ID) Indonesia seeking to raise IDR10T on July 28th sukuk auction - US financial press.

North America

-(US) Reportedly Pres Trump is poised to unleash fresh tariffs on dozens of countries as soon as this weekK - FT [US market close].

-(US) Pres. Trump: Effective August 1st, 2026, all Generic Drugs being brought into the United States will 'continue' to have a TARIFF of ZERO PERCENT for a two year period of time, after which the TARIFF will be raised to 100% for a one year period of time, and 200% thereafter. - post on Truth Social.

-(US) Treasury Sec Bessent: Can sanction any open source AI models if they do IP theft; Finding watermarks of U.S LLMs on many Chinese models [US market close].

-(US) USTR Greer: Canada trade retaliation has been notable, forcing President to take tailored action; We are not banning certain goods like Canada has done to U.S [US market close].

-(US) July Philadelphia Fed Non-Manufacturing Activity: +7.4 v -25.8 prior [US market close].

-(US) US Trump Admin reportedly considers banning imports of military grade drones - press citing FCC.

-(US) US to redirect ~$200B research funds to AI, away from colleges - WSJ.

-(US) Major US utilities sign on ratepayer-protection pledge - WSJ.

-(US) Texas power demand poised for record highs amid soaring temperatures - US financial press.

-(US) US Secretary of State Rubio: US is with ASEAN 100%, committed at highest levels; US is committed to diplomacy in Middle East, Iran - Remarks at ASEAN in Manila, Philippines.

-(US) Update: Sec State Rubio to meet with China Foreign Min Wang Yi in Manila at 4pm local time; To meet with Philippine Pres 2pm local time.

-(US) US House vote on stopgap funding measure is on track to pass; the measure would fund the US government until Dec 4th - US financial press.

-(US) Senate confirms White House attorney Kara Westercamp to US trade court – US financial press.

-(US) Jun Architecture Billings Index (AIA): 47.3 v 44.5 prior.

-(US) NKE Reportedly to cut off 'thousands' of online distributors in China next year, restructure digital footprint amid 'cluttered' marketplace - US financial press.

-(CA) Canada PM Carney: Latest tariffs threat is in violation of the USMCA deal; Spoke with Trump earlier this morning and they agreed to intensify negotiations in the coming weeks [US market close].

-(VE) US DOJ: Proposes Jun 2027 trial start date for Maduro case.

-(VE) Venezuela deal would be for stake in Petrodelta JV with PDVSA as Pacific Coast Energy is nearing a deal to operate certain oil fields located in Venezuela - US financial press.

Europe

-(RU) Russia Dep PM Novak: Fuel market partly stabilised but still difficult in some regions [EU market close].

-(RU) Russia strikes two more vessels, Odesa port facilities - Tass.

-(KZ) Kazakhstan to stop piping oil to Black Sea after tanker attacks - press [EU market close].

-(HU) Hungary central bank (MNB) cuts base rate by 25bps to 5.75%; as expected [EU market close].

-(NL) Netherlands Jun House Price Index M/M: 0.6% v 0.6% prior; Y/Y: 4.1% v 4.4% prior.

Middle East

-(IR) US Pres Trump: We're going to help Lebanon 'a lot'; We will be hitting Iran's Pickaxe mountain facility pretty soon; Will take care of Houthi blockade if it happens [US market close].

-(SA) Reportedly two tankers carrying Saudi oil have made U-turns in the Red Sea, following recent Houthi threats to shipping - press [EU market close].

-(SA) President Trump approves landmark nuclear deal with Saudi Arabia - WSJ [citing unnamed US officials].

-(IR) CENTCOM: Completes 11th night of strikes against Iran; Strait of Hormuz remains open for transit of commercial vessels - post on X.

-(IR) CENTCOM: Forces began striking Iran at 7pm ET today for 11th consecutive night - post on X.

-(IR) Iran vows powerful strike if the US hits its nuclear sites.

-(IR) Blasts reported in Tabriz in Northwestern Iran - FARS.

-(IR) Iran Army: Hit US targets at Camp Doha in Kuwait via drones "a few hours ago" - IRIB.

-(KW) Kuwait Official: Iranian attack on Kuwaiti power and desalination plants caused fires and repairs are ongoing [EU market close].

Levels as of 01:20 ET

Nikkei 225 +0.1%; ASX 200 +0.3%; Hang Seng -1.1%; Shanghai Composite +0.1%; Kospi +2.3%.

Equity S&P500 Futures -0.1%; Nasdaq100 -0.5%; DAX +0.3%; FTSE100 +0.2%.

EUR 1.1410-1.1397; JPY 163.23-163.03; AUD 0.7013-0.6997; NZD 0.5834-0.5822.

Gold +1.1% at $4,124/oz; BTC +0.5% at $66,105; WTI Crude Oil +1.3% at $85.43/bbl; Copper -0.2% at $6.5177/lbs.