Weak risk appetite spreads to Asia, Iran and US tariff uncertainty leads into weekend risk

Asia Market Update: Weak risk appetite spreads to Asia; Iran & US tariff uncertainty leads into weekend risk; Next week CB rate hike chances rise.

General trend and developments

-Korea and Asian tech shares followed US equities down on the last day of the week, putting a damper on the week’s earlier gains, Kospi fell as much as -6% and Nikkei more than -3% at its worst. Hynix and Samsung -8% as South Korea authorities to decide on ETF deposit requirements on July 31st, casting a shadow on both memory giants.

-Nasdaq is hovering just above its June lows, despite more good tech earnings with Intel and SAP rising post-earnings after the close; both companies posted strong Q2 2026 earnings reports driven by heavy AI demand, but it was Intel’s bullish guidance on EPS and Rev that stood out.

- Stepped-up FX intervention in Asian Emerging Market net oil importers. Amid recent intervention by RBI and BSP. Indian Rupee fell to another record low of 97/USD amid surging oil prices (Brent FUTs touched $100/bbl overnight) low again and the Philippine Peso also hit a fresh record low of 61.8/USD. Reprising memories of Mar/Apr during the opening phases of the Strait of Hormuz oil supply crisis. (On the other hand, South Korean Won strengthened to 1,463, best in nearly three months). Thailand authorities will also be sweating somewhat with June imports surging to >50% in June, leading to a blowout -6.5B deficit.

-Further weekend risk ahead with potential strikes by US and maybe Israel on Iranian power plants, if Trump’s latest threats of “major combat ops” come to fruition and the possibility of nuclear facility strikes in Iran remain.

-The surge in oil may only further raise the already significant jump in probabilities for hikes by FOMC (July 29th) and RBA (Aug 11th) from just a week or so, from 10-20% now up to 36-37% respectively. BOJ rate hike chances for October also continue to rise amid further financial press sources’ reporting that the BOJ (July 31st) will further pledge to hike hikes. OIS settlement probabilities of an October hike jumped further from 70.5% Wed to 83.5% last night.

-Japan’s June Core-Core CPI rose at the slowest pace in nearly four years, well below 2.0% target at 1.7%, joining headline and Core also continuing to measure well below 2%. Nevertheless, Japanese yield curve saw another day of steepening.

-Double-barreled trade concerns with Flexport stating that Strait of Hormuz has reverted to full war conditions, with transits collapsing to ~13 vessels a day, which is now propagating through ocean capacity. Much reaction out of Asian economies today on the new 10-12.5% US tariff rates related to USTR’s Section 301 tariffs related to forced labor, replacing Section 122 tariffs set to expire tomorrow. Although Oil, gas, fertilizer, and certain food stuffs will be exempted, New Zealand and Australia not happy about the rise from 10% to 12.5% even as Cambodia and others get the lesser 10% along with Japan and likely South Korea. EU also expressed displeasure as it remains unclear whether 10% or 12.5% applies to the bloc.

-Australia and Japan PMIs remained in expansion at the start of global PMI day.

-SpaceX again delayed its next attempt at Starhip’s launch to July 24th due to inclement weather. Tesla (-14%) and Google (-7%) fell heavily today, more than their after-hours losses last night, on investor fears of high levels of Capex versus expected ROI in the short to medium term.

-Intel did not explicitly confirm or announce a collaboration or buyout deal with SK Hynix for its Ohio plant in today's earnings report, but they did reaffirm their strong commitment to the Ohio project.

- South Korea's Pres Lee today in the US to meet with big tech CEOs and attend the AI Summit in San Francisco. to meet Nvidia's CEO Jensen Huang, OpenAI's CEO Sam Altman and Anthropic's CEO Dario Amodei, Broadcom's CEO Hock Tan. Samsung, SK Group, Hyundai Motors and Naver senior execs to also attend.

-US Treasury FX Policy Report stated China is not labeled a currency manipulator, but it stands out among trading partners for lack of transparency on exchange rate practices and policies, while several countries remain on the currency monitoring list such as Japan, Singapore, Taiwan, Thailand, Vietnam, Germany, Ireland and Switzerland.

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

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

-Thu July 23rd: 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 -0.5% at 8,790.

-(AU) AUSTRALIA JULY PRELIMINARY PMI MANUFACTURING: 51.7 V 51.5 PRIOR (4th month of expansion).

-(AU) Australian Trade Min Farrell: New US tariffs (now 12.5%, up from 10.0%) are "completely unjustified" - Statement.

-(NZ) New Zealand Trade Min McClay: New US tariffs "disappointing"; Rejects forced labor findings (prior tariff of 10.0% to increase to 12.5% under new forced labor tariffs).

-(AU) Australia Defense Minister: New US tariffs "makes no sense", disappointed with the US decision.

-(AU) Australia to make extra A$4.6B investment in naval infrastructure to support nuclear submarine construction yard - press.

-(AU) 9202.JP Australia regulator ACCC to grant Singapore Airlines, Japan's ANA authorization to coordinate some aspects of their operations between Australia and Japan, and some other countries, under JV.

-(NZ) New Zealand BNZ Jun Job Ads M/M: +0.2%.

China/Hong Kong

-(CN) Shanghai Composite opens -0.6% at 3,854; (HK) Hang Seng opens -1.1% at 24,932.

-(CN) China Coast Guard: Takes measures on several Philippines ships in waters around Scarborough Shoal.

-(CN) US Treasury FX Policy Report: China is not labeled a currency manipulator, but it stands out among trading partners for lack of transparency on exchange rate practices and policies [US market close].

-(CN) China MOFA: Vice Foreign Min Ma Zhaoxu visited US July 22-23rd; Discussed US-China strategic ties.

-(CN) China issues an 'orange' alert (2nd highest alert, behind the 'red' alert) for Typhoon Noui - Xinhua.

-(CN) Banks in China have issued loans referencing the repo rate for the first time – Press.

-(CN) JPM JPMorgan said to move over 30 China quant researchers to Singapore, Hong Kong - financial press.

-(CN) Zhongji Innolight: Follow up: Said to close books early for up to $7B in Hong Kong LIsting.

-(CN) USD/CNY China PBOC sets the yuan mid-point at 6.7939 v 6.7906 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY89B in 7-day Reverse Repos; Net drains CNY362B v drains CNY422B prior.

Japan

-(JP) Nikkei 225 opens -1.3% at 65,584.

-(JP) JAPAN JUN NATIONAL CPI Y/Y: 1.7% V 1.7%E; CPI (EX-FRESH FOOD) Y/Y: 1.6% V 1.6%E.

-(JP) JAPAN JULY PRELIMINARY PMI MANUFACTURING: 54.7 V 54.8 PRIOR (7th month of expansion).

-(JP) BoJ next week likely to maintain policy guidance pledging to keep raising interest rates; BoJ focus of attention to shift to extent to which firms pass on rising costs to households - US financial press [citing sources].

-(JP) Japan Trade Min Akazawa: US latest move on tariffs is regrettable; confirming the US will not go beyond the 2025 tariff deal.

-(JP) Japan Chief Cab Sec Kihara: US confirmed no additional tariffs for Japan above last year's deal (i.e. keeps 10.0% tariff rate).

-(JP) Japan Fin Min Katayama: US Treasury FX report cited US-Japan joint statement that says excessive FX volatility is undesirable; In contact with US 24 hours a day, 365 days a year.

-(JP) Japan to establish a panel to consider foreign immigrant numbers – Mainichi.

-(JP) Japan releases weekly flows data [period ended July 17th]: Foreign buying of Japan equities: -¥79.6 v +¥742.6B prior; Japan buying of foreign bonds: -¥714.4B v +¥1.1T prior.

Korea

-(KR) Kospi opens -1.6% at 6,986.

-(KR) South Korea Industry Ministry: US 301 probe on South Korea partially eases tariff uncertainty; To actively respond to ongoing overcapacity 301 probe - statement.

-(KR) USD/KRW South Korea's Won strengthens to as much as KRW1,463/USD, strongest level since early May 2026.

-(KR) South Korea to implement basic deposit requirements on ETFs from July 31st, 2026.

-(KR) South Korea to extend fuel tax cuts by 2 months through end-September - Yonhap.

-(KR) South Korea Fin Min Koo: To work to bring down July CPI to 2.0% level.

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

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

Other Asia

-(TW) Taiwan Cabinet: To maintain close communication with US on tariffs; Aiming for preferential treatment in US tariff decision (note: Taiwan placed in 10-12.5% basket) - Statement.

-(PH) Philippines: China Coast Guard used water cannon again at sea - press.

-(IN) USD/INR India Rupee hits fresh record low today, beyond INR97/USD at lowest levels (update).

-(TW) Taiwan Jun Industrial Production Y/Y: 23.0% v 17.5%e [EU market close].

-(TW) Taiwan Jun M2 Money Supply Y/Y: 8.1% v 7.8% prior; M1 Money Supply Y/Y: 9.4% v 9.6% prior [EU market close].

-(PH) Philippines' benchmark stock index falls as much as -1.5% to 6,189 points, lowest since July 26th 2026; Peso (PHP) also continues to trade at record lows vs the USD.

-(IN) USD/INR India RBI likely selling dollars to support Rupee at record low levels around 97/USD - traders.

-(TH) Thailand Finance Ministry on economic outlook:

-(TH) Cambodia's Commerce Min Cham Nimul; Has taken steps on forced labor-related US tariffs; Possible for Cambodia to see US duties below 19% - US financial press Television.

-(TH) Thailand Jun Customs Trade Balance: -$6.5B v -$4.0Be.

-(TH) Thailand Jun Car Sales +17.3% y/y; Thailand FTI cuts 2026 auto export forecast by 5.3% to 900K units, cites the Iran war.

-(SG) Singapore Q2 Final URA Private Home Prices: 0.5% v 0.5% prelim.

North America

-(US) USTR Greer: Announces 10-12% new Section 301 tariffs related to forced labor, replacing section 122 tariffs set to expire tomorrow; Will set 12.5% tariffs on nations that don't ban forced labor; Oil, gas, fertilizer, and certain food stuffs will be exempted.

-(US) US House of Representatives approved a $1.15T defense policy bill (**Note: largely along party lines) [US market close].

-(US) Initial Jobless Claims: 187K v 211Ke (lowest since Jan 2024); Continuing Claims: 1.796M v 1.809Me [US market close].

-(BR) Brazil Govt rejects 12.5% US's section 301 tariffs related to forced labor; Tariffs are arbitrary and unjustified.

-(US) DOJ: Resumes targeted antitrust merger review process; Works to eliminate bureaucratic burdens while still preserving the integrity of Second Request investigations [US market close];

-(US) Weekly EIA Natural Gas Inventories: +32 BCF vs. +33 BCF to +35 BCF indicated range [US market close];

-(US) Brent oil retests the $100/barrel level [US market close];

-(US) INTC Reports Q2 $0.38 adj v $0.21e, Rev $16.1B v $14.4Be; Guides Q3 strong; Increasing Capex for 2026-2027 - Guides Q3 $0.38 v $0.25e, Rev $15.8-16.8B v $15.1Be [US market close];

-(US) AMD TTN Summary AMD Keynote: Helios in "Full production" We're still in the very early innings for what's possible with AI tech; Demand for AI processing curb continues to steepen - Keynote [US market close];

-(US) Flexport Global Logistics Update: Strait of Hormuz has reverted to full war conditions, transits collapsed 66% to ~13 vessels a day versus a normal 88, and that single disruption is what's now propagating through ocean capacity, Red Sea closure risk, and a 38% year-over-year jet fuel premium driving air surcharges;

-(US) President Trump to make an announcement on nuclear innovation at 3PM ET on Friday 24th July, 2026;

-(US) MTW US Government Affirms Manitowoc’s Anti-Dumping Claim;

-(CA) Canada May Retail Sales M/M: 1.0% v 1.0%e [US market close];

-(MX) Mexico Pres Sheinbaum: Mexico and the US make progress on the TMEC review;

-(BR) Brazil Fin Min Durigan: Brazil interest rates negatively impact families, farmers, businesses, and the government - Interview to Band News;

-(CL) Chile Pres Kast names Juan Pablo with Tomas Bunster as new Finance undersecretary.

Europe

-(EU) ECB LEAVES KEY RATES UNCHANGED; AS EXPECTED [EU market close].

-(EU) ECB Chief Lagarde: Decision to keep policy steady was unanimous; some members asked themselves if a hike was needed, but there was no push for a hike today - Q&A [EU market close].

-(EU) ECB Officials are reportedly ready to raise rates in Sept - press [EU market close].

-(EU) EU Foreign Affairs Policy Chief Kallas: New US tariffs 'not really grounded"; Was not expecting to be included in new US Tariffs.

-(EU) Euro Zone July Advance Consumer Confidence: -15.9 v -17.0e [EU market close].

-(UK) UK PM Burnham said to cut business rates for pubs and clubs; live music venues [EU market close].

-(UK) July GfK Consumer Confidence: -17 v -22e [highest since Jan and largest m/m rise since Nov 2023].

-(FR) France July Business Confidence: 97 v 95e; Manufacturing Confidence: 101 v 101e [EU market close].

-(ZA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATES UNCHANGED AT 7.00%; NOT EXPECTED; **Note: 1st pause under the recent tightening cycle. Analysts had expected SARB to have raised Interest Rates by 25bps to 7.25% [EU market close].

Middle East

-(IR) US President Trump: Please let this statement serve to represent, until further notice, that from this point forth, any and all damages done to Ships, Cargo, or anything related thereto, will be paid for by Iranian Money that the United States has in its possession, and controls. - post on Truth Social.

-(IR) Iran's Foreign Min Araghchi: Seizing another nation's assets to pay for unrelated future claims is an incendiary precedent.

-(SA) OPEC+ reportedly likely to raise output quotas for Sept to 188K barrels per day at Aug meeting - press [EU market close].

-(IR) US Pres Trump: Seriously considers restarting major combat ops in Iran; Doesn't have a deadline, but is close to a decision - Axios interview [US market close].

-(IR) IRGC reportedly sent officers and missile related equipment to Yemen's Houthis earlier this month - press [US market close].

-(IR) CENTCOM: Completed latest round of strikes on Iran - post on X.

-(IR) CENTCOM: Forces started more strikes against Iran at 6:45pm ET - post on X.

-(IR) Iran's State Broadcaster: Explosion heard West of Iran's Bandar Abbas; According to the NYT, Iran rejects US cease-fire deal presented by Iraqi leader.

Levels as of 01:20 ET

Nikkei 225 -2.7%; ASX 200 -0.7%; Hang Seng -1.2%; Shanghai Composite -0.9%; Kospi -4.8%.

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

EUR 1.1388-1.1375; JPY 163.94-163.73; AUD 0.6981-0.6964; NZD 0.5786-0.5769.

Gold -0.6% at $4,027/oz; BTC -0.5% at $65,382; WTI Crude Oil -0.4% at $91.81/bbl; Copper -0.2% at $6.3265/lbs.