Asia markets mixed ahead of July 9th trade deadline

Asia market update: Asia markets mixed ahead of July 9th trade deadline and amid quiet trading ahead of key US data Thursday.

General trend

- Nikkei again down as Pres Trump cast his own doubts about a Japan-US trade deal being done by the July 9th deadline, and suggested Japan may need to pay a 30-35% tariff (significantly higher than the 24% tariff rate initially levied against Japan on “Liberation Day” back on April 2nd). Japan PM Ishiba seemed a little bit slow on the uptake today when he commented that talks with the US seem more about investment than tariffs. STOP PRESS: Nikkei spiked and pared a majority of its losses and 2-yr JGB yields rose in late trading following trade rep Akazawa’s announcement he would be heading back to the US for more talks this weekend.

- At the same time, Trump hinted there may be a deal with India in the offing.

- Kospi in Korea under-performed -0.7%, with tech following Nasdaq down (Hynix -2.5%).

- Hang Seng outperformed +0.9% after a holiday yesterday.

- The President of the world’s largest toilet maker Japan’s Toto (5332.JP) said “US sales are booming” despite price increases related to tariffs.

- In other trade news, UK PM Starmer’s desire to get back into the EU trading bloc reportedly has been stymied by the EU.

- South Korea had mixed inflation numbers for Jun, with m/m showing no inflation but the annualized figure above the BOK’s goal of 2% (BOK indicated in early June that inflation will be “high 1%" level during H2 and that June CPI may rise on base effect”).

- Note potential volatility for AUD/NZD next week? [Ahead of the Australia RBA meeting on July 8th (RBNZ also the following day, July 9th). Retail Sales in Oz saw a fourth straight month of minimal growth [only solid growth was in WA, up for a seventh straight month], bolstering the already high 97% probabilities of a further 25bps rate cut to 3.60%. Oz May Building Approvals also less than estimates].

- WTI crude steady ahead of this weekend’s OPEC+ meeting, with markets expecting a further 411K bpd production increase.

- Little movement in currencies today, with compressed ranges.

- Hong Kong and Mainland China bourses seeing a surge in IPO applications for listings this year, particularly the past month of June.

- US Fed’s Powell, ECB’s Lagarde, BOJ’s Ueda and BOE’s Bailey all spoke at the annual Sintra Forum in Portugal overnight, all with an emphasis on caution and waiting for more data. Powell appeared to at least be partly open to a cut as early as July.

- Central Bank speak might continue as the EU’s Sintra conference concludes today; BOJ’s Takata due on Thurs (last spoke in Feb)

- Reminder: Samsung generally guides prelim Q2 in early July.

- US equity FUTs +0.3%, and well off their earlier US session lows during Asian trading. S&P FUTs made fresh new highs during the Asia session.

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

- Wed July 2nd ECB Sintra Forum continues (concludes today).

- Thu July 3rd AU May Trade Balance, JP BOJ Takata speech, CN Jun Caixin Services PMI, (Thu night US Jun NFP, US Jun ISM Services PMI).

- Fri July 4th JP May Household spending.

Holidays in Asia this week

- Tue July 1st Hong Kong.

- Thu July 3rd US early close 13:00ET.

- Fri July 4th US (Independence Day).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.4% at 8,576

- AUSTRALIA MAY RETAIL SALES M/M: 0.2% V 0.5%E

- Australia May Building Approvals M/M: 3.2% v 4.0%e- Australia sells A$1.2B vs. A$1.2B indicated in 2.75% Jun 2035 bonds; Avg Yield: 4.1380% v 4.2413% prior; bid-to-cover: 3.36x v 3.44x prior

- (NZ) Barfoot: The Auckland property market had a strong close to the summer/autumn selling season with sales numbers at their strongest for the month of June in four years.

- Fonterra Global Dairy Trade Auction Dairy Trade price index: -4.1% v -1% prior.

China/Hong Kong

- Hang Seng reopens +1.0% at 24,304; Shanghai Composite opens flat at 3,458.

- (HK) PWC: Sees 90-100 new stock listings in Hong Kong this year; Estimates HK$200-220B in total IPO fund raising in 2025 - statement.

- China Securities Times: Shanghai, Shenzhen and Beijing stock exchanges accepted 150 new applications for IPOs in June, highest tally for 2025 YTD.

- Co planning $7B subsidies for instant commerce, relates to Taobao - Taobao WeChat post.

- Hong Kong Monetary Authority (HKMA) said to have sold HK$20.1BB to defend FX peg (currently upper-end of band at HK$7.85) - update.

- US DOJ charges two individuals with acting as agents of the Chinese govt.

- Reportedly China offers tax refund to French cognac makers amid EU brandy anti-dumping probe; Major brands Hennessy, Martell and Rémy Martin have been offered the terms - SCMP.

- China reportedly vows to develop marine economy; To build fiscal system conducive for unifying market.

- China PBOC sets Yuan reference rate: 7.1546 v 7.1534 prior.

- China PBOC Open Market Operation (OMO): Injects CNY99B in 7-day reverse repos; Net drains CNY267B v drains CNY276B prior.

Japan

- Nikkei 225 opens -0.9% at 39,633.

- Japan Jun Monetary Base Y/Y: -3.5% v -3.4% prior.

- Japan Trade Negotiator Akazawa: Arranging another US visit as early as this weekend for continued trade talks - Japanese press.

- Japan PM Ishiba: Talks with the US seem more about investment than tariffs - financial press.

- US said to delay handling of Japan trade talks to focus on US-India deal – Nikkei.

- US Sec of State Rubio to travel to Japan, South Korea and Malaysia from around July 7th on his first trip to Asia as Sec of State - Nikkei Asia.

- Toto Ltd (5332.J) President said US sales are 'booming' despite price increases related to tariffs - Nikkei.

- (US) Pres Trump: Not thinking about extending current tariff deadline past July 9; Doubt we'll make deal with Japan; Japan could pay 30-35% tariff; May possibly have a deal with India- comments to media.

- BOJ Board Member Masu: My stance is neither hawkish nor dovish; Want to see data from BOJ staff for policy; Agree with view that price trend still below the target - inaugural press conference.

Korea

- Kospi opens - 0.2% at 3,083.

- (KR) South Korea Jun CPI M/M: 0.0% V 0.1%E ; Y/Y: 2.2% V 2.1%E; CPI (ex-food/energy) Y/Y: 2.0% v 2.0%e.

- China said to have 'sounded out' South Korea Pres Lee attendance at its Sept 3rd military parade [80th anniversary of the end of World War II] - China press.

- Bank of Korea (BOK) comments on Jun CPI data: June CPI gain mainly due to base effect (inline).

- Bank of Korea (BOK) Gov Rhee: We're keeping an eye on financial stability risk in deciding about further cuts [overnight update].

Other Asia

- India Central Bank (RBI) panel likely to recommend India maintains 4% inflation target - financial press.

- Indonesia Central Bank (BI) Gov Warjiyo: need extra efforts to support economic growth; expect that exports will be weaker.

- Indonesia Fin Min Indrawati; Sees 2025 GDP growth between 4.7-5.0%.

- Thailand court unanimously voted to hear petition seeking removal of PM; the vote was 7 to 2 to suspend PM from office due to ethics breech from leaked phone call [overnight update].

- Thailand Jun Business Sentiment Index: 48.6 v 46.7 prior [overnight update].

North America

- (US) State Dept: 2025 Quad Foreign Ministers’ Meeting; Includes increasing critical minerals cooperation.

- (UR) US said to have halted the delivery of some previously promised weapons to Ukraine, on concerns the US 'not having enough'; White House not confirming when asked - US press.

- (CA) Canada Ambassador to Washington; Canada still aiming to lift all Trump tariffs as part of trade deal with US - Canada press.

- US House Speaker Johnson: 85-90% of the "OBBB" tax/budget bill was generated in the House; Hoping to vote on tax bill by Wed, Thu at latest - Fox News interview.

- (US) Treasury Sec Bessent: A little 'bewildering' that tariffs would not push the Fed towards a rate cut - Fox News interview.

- (US) Treasury Sec Bessent: Moving toward a vote on OBBB tax/budget bill today; Think we'll get Senate approval this afternoon; Very close to trade deal with India - Fox News.

- (US) Pres Trump: Will have to look into deporting Elon Musk; DOGE may "go back and eat Elon" - White House.

- (US) Weekly Redbook LFL Sales w/e Jun 28th: +4.9% y/y; Jun MTD: +4.9% y/y.

- (BR) Brazil Jun Manufacturing PMI: 48.3 v 49.4 prior (2nd month of contraction).

- (US) Jun Final S&P Manufacturing PMI: 52.9 V 52.0E (confirms 6th month of expansion).

- (US) May construction spending M/M: -0.3% V -0.2%E.

- (US) Jun ISM Manufacturing: 49.0 V 48.8E; Prices Paid: 69.7 v 69.5e; - New Orders: 46.4 v 48.1e.

- (US) May JOLTS Job openings: 7.77M V 7.30ME; Quits rate 2.1% v 2.0% prior -(US) Senate Maj Leader Thune: Believe GOP has deal to pass tax bill.

- (US) US Senate votes yes for Trump's tax bill (one big Beautiful Bill act).

- (US) House Speaker Johnson: House will work quickly to pass the tax bill by July 4th.

- (US) Rep Ogles (R-TN): Will oppose the Senate version of the tax bill, its a 'dud'.

- (JP) US said to delay handling of Japan trade talks to focus on US-India deal - Nikkei.

- (US) Pres Trump: Not thinking about extending current tariff deadline past July 9; Doubt we'll make deal with Japan; Japan could pay 30-35% tariff; May possibly have a deal with India- comments to media.

- (US) House Speaker Johnson: The Senate amended the tax bill a little more than Trump's Admin preferred.

Europe

- (UK) EU said to block UK's attempt to re-join the EU trading bloc - FT.

- (IL) US Pres Trump: Israel agreed to conditions for 60 day ceasefire; My team had productive meeting with Israel on Gaza - post on Truth Social.

- (IR) Iran said to have made preparations to mine Strait of Hormuz in June, but did not deploy in the end - US press, citing US officials.

- (EU) Mercosur-EU FTA talks said to have concluded for sub-group of EU nations known as EFTA - CNN Brasil, citing Brazil govt officials.

- (DE) Germany Chancellor Merz: Optimistic on US-EU trade deal, but unsure if it'll happen.

- (EU) EU reportedly toughens stance on Trump's tariffs as deadline approaches; European capitalists insist that US drops levies on EU as part of any framework deal; Push for reductions in the 10% reciprocal tariffs - FT.

- (US) Fed Chair Powell, (UK) BOE Gov Bailey and (JP) BOJ Gov Ueda panel comments from Sintra conference.

- ECB Pres Lagarde: Not saying mission accomplished, but target has been reached; Need to remain extremely vigilant on inflation; We're well equipped to navigate tormented waters.

- Eurozone Jun advance CPI estimate Y/Y: 2.0% V 2.0%E; CPI Core Y/Y: 2.3% V 2.3%E.

- (DE) Germany Jun unemployment change: +11.0K V +15.0KE; claims rate: 6.3% V 6.4%E.

- (DE) Germany Jun final Manufacturing PMI: 49.0 V 49.0E (confirms 36th month of contraction but highest since Aug 2022).

Levels as of 01:20 ET

- Nikkei 225 -0.4%, ASX 200 +0.8%, Hang Seng +0.7%; Shanghai Composite flat; Kospi -0.7%.

- Equity S&P500 Futures +0.3%; Nasdaq100 +0.3%; DAX +0.4%; FTSE100 +0.3%.

- EUR 1.1789-1.1810; JPY 143.33-144.75; AUD 0.6565-0.6584; NZD 0.6091-6106.

- Gold +0.1% at $3,351/oz; Crude Oil +0.1% at $65.52/bbl; Copper +1.6% at $5.1178/lb.