Global Market Quick Take: Asia – July 21, 2025

Key points:

• Macro: Japan’s ruling coalition loses its upper house majority
• Equities: Markets remain near record; Netflix fell 5.1% despite beating revenue
• FX: The yen rose after Japan's ruling coalition lost its majority
• Commodities: Hedge funds upped copper bets on Comex to a nine-month high
• Fixed income: Treasuries rose after Fed Governor Waller's dovish comments

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• Japan's ruling coalition lost the upper house in Sunday's election, further weakening Prime Minister Shigeru Ishiba. He plans to remain party leader due to a looming U.S. tariff deadline. The election adds pressure after losing the lower house in October.
• University of Michigan consumer sentiment rose to 61.8 in July 2025 from 60.7 in June, exceeding the forecast of 61.5. Current conditions improved to 66.8, expectations to 58.6, with short-run business conditions up 8% and personal finances down 4%. Year-ahead inflation expectations dropped to 4.4% and long-run to 3.6%.
• New Zealand's CPI rose 0.5% in the June 2025 quarter, down from 0.9% and below the 0.6% forecast. Cultural services, mainly TV streaming, increased 9.5%, accounting for 25.8% of the rise. Electricity prices rose 4.9%, contributing 24.7%, and vegetable prices surged 10%, adding 20.4%. Fuel and accommodation costs fell, partially offsetting these gains.

Equities:

• US - US stocks closed mostly flat on Friday as investors balanced President Trump's tariff demands on the EU against strong economic data and earnings. The S&P 500 and Nasdaq 100 remained near record levels, while the Dow Jones fell 142 points due to a 2.2% drop in American Express shares. Trump is pushing for tariffs of 15-20% in a deal with the EU, aiming to finalize by August 1. Netflix shares dropped 5.1% despite beating revenue and earnings estimates; Charles Schwab rose 3%, and Chevron gained 1% after acquiring Hess for $53 billion. The University of Michigan's survey indicated rising consumer confidence and a decrease in one-year inflation expectations to 4.4%, the lowest since February. 
• EU - European stocks reversed morning gains to close lower on Friday amid corporate updates and US-EU trade negotiations progress. The Eurozone's STOXX 50 declined 0.3% to 5,359, while the STOXX 600 slipped to 547. Tech stocks remained volatile due to tariff concerns, with ASML down 2.6%. Luxury and auto brands like Hermes, LVMH, Mercedes Benz, and Stellantis fell 1-3%. Vivendi surged 13.2% after a French advisor required Bollore's takeover bid of Vivendi, while Saab jumped 16% following strong operating income results.
• HK - Hang Seng jumped 1.3% to 24,825 on Friday, bouncing back from two days of losses as all sectors rallied. The index reached a four-month high and rose 2.8% for the week, marking consecutive weekly gains. Mainland stock momentum bolstered sentiment after Beijing vowed to address aggressive price cuts. Hong Kong's tech index rose 1.7% following Nvidia's plans to boost supply of China-compliant H20 chips. Gains extended to consumer and financial sectors as President Trump eased his stance on China, raising trade deal hopes before the August 12 deadline. Notable gainers included Smoore Hlds. (5.0%), Hansoh Pharma (3.6%), Nongfu Spring (3.5%), and Kuaishou Tech. (2.1%). 

Earnings this week:

• Monday: Verizon, Domino's Pizza, Crown Holdings, Ryanair
• Tuesday: Lockheed Martin, Coca-Cola, General Motors, Philip Morris International, SAP, Matador Resources, Texas Instruments, RTX Corporation, Northrop Grumman
• Wednesday: Tesla, Alphabet, AT&T, Hasbro, ServiceNow, IBM, Chipotle Mexican Grill, QuantumScape
• Thursday: American Airlines, The Blackstone Group, Nokia, Southwest Airlines, Flex, Union Pacific, Intel, Newmont Corporation, Deckers Brands, Nasdaq,
• Friday: Centene Corporation, HCA Healthcare, 

FX:

• The dollar index marked its best two-week rally of the year, despite weakening Friday after Fed Governor Christopher Waller's call for a rate cut. 
• The Japanese yen was weakest among G10 currencies, with hedge funds turning bearish. Following the elections where Japan's ruling coalition failed to win a majority, the yen rose. USDJPY fell 0.7% to 147.79 but later trimmed losses to 0.1%. Japan's market holiday led to widened spot spreads amid low liquidity. 
• NZDUSD dropped 0.3% to 0.5947, and its 2-year yields decreased by 5 basis points to 3.24% due to lower-than-expected inflation, raising chances of an August RBNZ cut to 86%. 
• AUDUSD and EURUSD remained stable at 0.6506 and 1.1624, respectively.

Commodities:

• Oil prices stabilized after their first weekly drop this month, focusing on trade deal progress and the EU's efforts to curb Russian energy exports. Brent crude was around $69 per barrel and WTI above $67. EU envoys are preparing to meet regarding a potential no-deal with U.S. President Trump's firm tariff stance as the August 1 deadline approaches.
• Copper and nickel rose as confidence in the U.S. and Chinese economies boosted global markets. Hedge funds raised bullish copper bets on Comex to a nine-month high. Aluminum and iron ore were up, with zinc climbing 3.0%. 

Fixed income:

• On Friday, Treasuries increased after dovish comments from Fed Governor Waller and lower-than-expected consumer inflation expectations from the University of Michigan survey. Waller's suggestion for a rate cut to address potential labor market weakness was rare, with swaps traders seeing it as unlikely. Despite initial gains, a sizable SOFR futures sale halted the rally. The 10-year yield dipped about 2 basis points to 4.43%, while futures trading volumes were light at 66% of the 20-day average.

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