Asia market update: JPY, Oil softer as EU/UR to meet Trump Mon re RU/UR war; Nikkei fresh record high; US Steel & Chip tariffs this week along with focus on key events.
General trend
– Putin offered a glimmer of hope that Russia may soon be ready for peace, but “only if all Russia’s concerns are taken into account” – with his comments uttered amid continued military strikes by Russia to shore up strategically important regions in Eastern Ukraine. The most tangible outcome of the meeting in Alaska was not a ceasefire but simply an agreement to a further meeting for “Settlement Negotiations”, potentially soon with Ukraine’s Pres Zelenskiy, who first confirmed after a 90 minute phone call with Pres Trump that he will travel to Washington DC on Monday – saying he is ready for “constructive cooperation”. Trump for now will not impose any secondary sanctions as he threatened pre-Summit, but he may revisit the issue in “in two to three weeks”. Some European leaders may also fly to DC, including Finland’s Pres Stubb, NATO’s Rutte, EU’s Von der Leyen.
– JPY/USD and WTI crude both weaker with US equity FUTs ticking higher on the perceived reduction in geopolitical risk following Friday’s Alaska events and further upcoming meetings regarding Ukraine.
– ASX ticked up again to a fresh record high during peak H1/FY25 earnings season for Australia.
– Japan’s Nikkei and Topix banking both hit fresh record highs, with Transport +1.3% and major component Fast Retailing +1.8%, auto-makers also stronger on weaker Yen. (Toyota +1.5%, Mazda +1.4%, Honda +1.0% with Suzuki Motors and India unit Maruti Suzuki +7% particularly on news that India may reduce its consumption tax for small cars.
– Japan crypto-related stocks up today on a report Japan FSA (financial regulator) will approve a Yen-denominated Stablecoin this month (August). Ceres +7%
– BTC, however, continued losing ground, -2.1% to $115K, ETH -3.5%, Solana -4.7%.
– China bond yields continue their recent path up, 30-years +4.4bps, 10-years +2.5bps.
– In trade news late Friday Pres Trump said the tariff rates on chips and steel will be set next week, adding they will be “lower at the beginning”. Hynix -2.9% with Korea’s Kospi -1.5%.
– Asian steelmakers trades generally lower as investors assess steel/aluminum tariff update from the US. Only modest losses seen. Large CN aluminum name CHALCO -1.9%.
– US govt also added 407 Harmonized Tariff Schedule of the United States (HTSUS) codes to the list of Section 232 tariff codes that will be considered as steel or aluminum derivative products.
– India and US August trade talks to be ‘called off’; No new schedule for talks as of yet. US trade advisor Navarro had some frank words for India, saying they need to “start acting like a strategic partner”.
– Very little news coming out of China, amid unsubstantiated rumors within China social media that Pres Xi is sick, or else General Zhang of the PLA has taken more direct power in Beijing over Xi supporters.
– Key events this week include US Fed’s Jackson Hole meeting Aug 21-23, with the theme this year to be “Labor Markets in Transition”, headlined by Chair Powell’s speech on Fri 22nd. (BOE’s Gov Bailey and ECB’s Lagarde to also speak). New Zealand’s RBNZ predicted to cut rates while Sweden’s Riksbank set to hold. UK July CPI and global flash PMIs highlight the docket, while the end of US earnings season sees Retail stocks + Nvidia to report Q2.
– US equity FUTs +0.1% to +0.2% during Asian trading.
Looking ahead (Asian-weighted releases, using Asian time zone)
– Mon Aug 18th (Mon eve) China July FDI.
– Tue Aug 19th AU Aug Consumer Confidence (Tue night US July Housing Starts).
– Wed 20th JP July Trade Balance, CN LPR, NZ RBNZ Rate Decision, (Tue eve UK July CPI, ID Rate Decision, Tue night US FOMC Minutes).
– Thu Aug 21st NZ Trade Balance, Global Flash PMIs, (Thu night EU Aug Consumer Confidence, US July Home Sales).
– Fri Aug 22nd JP July CPI, (Fri eve UK July Retail Sales, US Fed Chair Jackson Hole speech).
Holidays in Asia this week
– Thu Aug 21st Philippines.
Headlines/economic dataAustralia/New Zealand
– ASX opens -0.2% at 8,923.
– Fitch affirms New Zealand at AA+, Outlook Stable.
– New Zealand July Performance of Services Index: 48.9 v 47.6 prior.
– New Zealand July Non-resident bond holdings: 62.8% v 62.7% prior.
– NZIER: Monetary Policy Shadow Board: Majority recommends 25bps cut to OCR on Aug 20th.
– RBNZ: Business expectations for annual CPI inflation one, two, and five years ahead increased; Mean one-year-ahead annual inflation expectations increased from 2.44% to 2.53%.
China/Hong Kong
– Hang Seng opens +0.1% at 25,293; Shanghai Composite opens +0.4% at 3,712.
– China banks said to affirm ban on credit card funds purchasing equities – Securities Times.
– China 30-year Bond yields +4.4bps to 2.038%.
– China PBOC sets Yuan reference rate: 7.1322 v 7.1371 prior.
– China PBOC Open Market Operation (OMO): Injects CNY267B in 7-day reverse repos; Net injects CNY155B v injected CNY116B prior.
Japan
– Nikkei 225 opens +0.3% at 43,503.
– Japan Jun Tertiary Industry Index M/M: 0.5% v 0.2%e.
– Japan corporate tax increase emerges as option for ruling LDP and opposition – Nikkei [update].
– Japan FSA (financial regulator) reportedly to approve yen-denominated Stablecoin this month (August) – financial press.
Korea
– Kospi opens -0.7% at 3,202.
– South Korea Pres Lee: Orders prep for partial step-by-step implementation of existing South- and North Korea agreements – financial press.
– South Korea considering 4.5 day work week to ease burden on workers – Nikkei Asia (update).
Other Asia
– (US) Follow up: White House trade adviser Navarro: If India wants to be treated as strategic partner of the US, it needs to start acting like one – FT.
– India and US Aug trade talks to be ‘called off’; both sides remain in contact with each other; new schedule for talks has not been finalized – financial press [update].
– Thailand Q2 GDP Q/Q: 0.6% v 0.5%e; Y/Y: 2.8% v 2.7%e.
– Singapore July Non-Oil Domestic Exports Y/Y: -4.6% v -1.0%e.
– (TW) Taiwan report sees govt with 2026 budget deficit of $11.3B due to increased defense spending, other – Taiwan press, citing sources.
– (TW) Trump: China’s Xi has told me he would never invade Taiwan while Trump is President; he also said, ‘But I am very patient, and China is very patient’ – Fox News interview [weekend update].
North America
– (US) NHC on Tropical Storm Erin: Re-intensifies into Cat 4 Hurricane; Life-threatening surf and rip currents likely across US Eastern Seaboard as it becomes a very large Hurricane this week.
– (US) Pres Trump: Ukraine Pres Zelenskiy can end the war with Russia almost immediately, if he wants to: Or he can continue to fight – press.
– (US) Pres Trump: Will set tariff rates on chips and steel next week; Going to be lower at the beginning [weekend update].
– *(US) Pres TRUMP: We made some great progress today, just a few points left to agree on, a few things left to resolve; there is no deal until there is a deal; ultimately up to nato and Ukraine to agree [weekend update].
– (US) US govt officially posts Section 232 tariff codes for steel and aluminum products; BIS is adding 407 Harmonized Tariff Schedule of the United States (HTSUS) codes to the list of products that will be considered as steel or aluminum derivative products [weekend update].
– (US) Jun total net TIC flows: $77.8B V $311.1B prior; net long-term TIC flows: $150.8B V $259.4B prior [weekend update].
– (US) AUG PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 58.6 V 62.0E [weekend update].
Europe
– UK) Aug Rightmove House Prices M/M: -1.3% v -1.2% prior; Y/Y: 0.3% v 0.1% prior.
– (RU) Senior Russia Diplomat: Russia agrees that any future peace agreement must provide security guarantees to Moscow as well as Kyiv – financial press.
– (UR) France Pres Macron: Ukraine may need to recognize loss of lands under potential peace deal; If we are weak today, we will pay a heavy price tomorrow – financial press.
– (UR) Reportedly Finland Pres Stubb, NATO Sec Gen Rutte and EU Commission Pres Von Der Leyen may join Zelenskiy-Trump summit on Monday, Aug 18th – press
– (US) European leaders have been invited to join Trump’s White House meeting with Zelenskiy on Monday – NYT.
– (UR) Reportedly Putin told Trump that if Ukraine withdraws fully from the eastern Donetsk and Luhansk regions, Russia would freeze the front line in the southern regions of Kherson and Zaporizhzhia – press.
– *(RU) RUSSIA PRES PUTIN: “SINCERELY INTERESTED TO END THE CONFLICT, BUT ALL ‘ROOT CAUSES’ MUST BE ELIMINATED AND ALL RUSSIA’S CONCERNS MUST BE TAKEN INTO ACCOUNT”.
– (US) Ukraine Pres Zelenskiy: Ukraine is ready for constructive cooperation; Will travel to Washington DC on Monday; Phone conversation with Trump lasted over 90 mins [weekend update].
Levels as of 01:20 ET
– Nikkei 225 +1.0%, ASX 200 +0.2%, Hang Seng +0.6%; Shanghai Composite +1.2%; Kospi -1.5%.
– Equity S&P500 Futures +0.1%; Nasdaq100 +0.2%; DAX +0.2%; FTSE100 +0.2%.
– EUR 1.1694-1.1716; JPY 147.08-147.58; AUD 0.6507-0.6523; NZD 0.5929-5941.
– Gold +0.5% at $3,400/oz; BTC -2.0% at $115,820; Crude Oil +0.1% at $62.06/bbl; Copper +0.1% at $4.4955/lb.