Nikkei rips to all-time high as China-US pause continues

Asia market update: Nikkei rips to all-time high as China-US pause continues; RBA cuts 25bps; Focus on US July CPI.

General trend

- Another remaining wobbly block within the global Jenga tariff tower being remade by Pres Trump was given a further dose of glue with China and US both simultaneously confirming to continue the current China tariff deadline by a further 90 days.

- [However, late in the session China urged Chinese firms not to use Nvidia H20 chips in fresh guidance, only days after receiving permission from the US govt to export the H20 to China. Move was foreshadowed over the weekend by China state media referring to the chips as 'unsafe' for use in China]. Nikkei lost some of its earlier surge on the news, see below.

- Nikkei ripped 2.7% following yesterday’s holiday, hitting an all-time high, tech stocks Softbank and Advantest surged +7%. Market appreciation of the tariff certainty tail-wind for Japan continued with raised guidance last week from a number of large JP exporters, including autos, to the US. Today’s 90-day further pause between US-China right at the opening bell (20:00 ET) also no doubt helped accelerate the initial +0.8% open. While Australia’s ASX also another fresh all-time high, and the Kospi just a few dozen points off its record high back from 2021.

- In other trade news, reports that Taiwan looking to create strategic partnership with the US, amid its attempts to reduce its tariff rate from 20% down to 15%. (Reminder last week Trump said to have told Taiwan that if it wants a 15% tariff TSMC must acquire a 49% stake in Intel AND make an additional investment of $400B in the US].

- US Pres Trump confirmed that gold shipped into the US will not be tariffed after all.

- Australia's RBA as expected cut rates by 25bps, also cutting its terminal rate to 2.9% (prior 3.20%). Gov Bullock due to give per post-decision presser as this Update does out.

- In Chinese crypto, Ant Financial Group denied speculation that with the China PBOC it was planning a rare earth-backed Yuan stablecoin.

- Japanese July M2 Money Supply saw its fastest growth since Feb, +1.0%.

- Australia July NAB Business Confidence better than prior, but Business Conditions down.

- Interesting tidbit for Intel, recently under pressure from Pres Trump. Stock +6% today during regular + after-hours trading in a turnaround from Pres Trump, last week calling for the CEO’s immediate resignation for being ‘conflicted’ met and then today, upon meeting him, praising CEO Lip-Bu Tan's 'amazing story'.

- Bitcoin lost all of its gain yesterdays to gain by 118K.

- US equity FUTs -0.1% to -0.2% during Asian trading.

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

- Tue Aug 12th (Tue night US July CPI).

- Wed Aug 13th KR July Unemployment, Thai rate decision.

- Thu Aug 14th AU July Jobs, (Thu eve UK Q2 prelim GDP, Thu night US July PPI, CN New Yuan Loans).

- Fri Aug 15th NZ July Business PMI, JP Q2 Prelim GDP, CN July ‘data dump’, (Fri night US July Retail Sales, US July Michigan Consumer Sentiment, CN July FDI).

Holidays in Asia this week

- Mon Aug 11th Japan.

- Tue Aug 12th Thailand.

- Fri Aug 15th India, South Korea.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 8,847.

- Australia July NAB Business Confidence: 7 v 5 prior.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 89.3 v 90.6 prior.

China/Hong Kong

- Hang Seng opens -0.3% at 24,824; Shanghai Composite opens flat at 3,647.

- NVDA *(CN) China reportedly over the past few weeks urged firms not to use less advanced chips, including Nvidia H20, in new guidance - press.

- China issues statement on US-China trade talks; Agrees with US to extend tariff truce for 90 days - govt statement.

- 6688.HK Follow up: Ant Group reportedly denies speculation planning a rare earth-backed Yuan (CNY) stablecoin collaboration with China PBOC - financial press.

- (US) President Trump signs Executive Order extending China tariff deadline by 90 days (as widely expected) – CNBC.

- Reportedly China demands that the Trump administration ease restrictions on HBM exports; China is much more worried about HBM controls because they seriously constrain the ability of Chinese companies, including Huawei, to develop their own AI chips - FT (update).

- China issues decree on infectious diseases epidemic warnings, standardizing warnings for infectious diseases, and seeks to improve infectious disease monitoring – press [overnight update.

- China said to seek views on implementation of VAT law – press [overnight update].

- China PBOC sets Yuan reference rate: 7.1418 v 7.1405 prior.

- China PBOC Open Market Operation (OMO): Injects CNY115B in 7-day reverse repos; Net drains CNY46B v drains CNY433B prior.

Japan

- Nikkei 225 reopens +0.8% at 42,125.

- Japan's Nikkei 225 hits all time high.

- Japan July M2 Money Supply Y/Y: 1.0% v 0.9% prior [fastest growth since Feb].

- Follow up for Japan govt-backed chip-maker Rapidus: Reportedly needs a "Plan B" in pursuit of 2nm chips - Nikkei.

Korea

- Kospi opens +0.1% at 3,209.

- South Korea Pres Lee and US Pres Trump confirmed to hold Summit meeting on Aug 25th – press.

- South Korea Presidential Office: No change in position on tax [threshold related to stock tax]; to monitor market and discussion between the government and ruling DP

Other Asia

- Singapore Q2 Final GDP Q/Q: 1.4 v 1.4% prelim; Y/Y: 4.4% v 4.3% prelim.

- Singapore MAS Chief Economist: Policy remains appropriate and MAS well placed to respond to risks.

- India govt to parliamentary committee: Not viewing US-India relationship via trade only [overnight update].

- Taiwan said to create strategic partnership between US and Taiwan – press [overnight update].

North America

- XAI.IPO CEO MUSK: xAI to take immediate legal action against Apple for "antitrust violation"- post on X.

- (US) Pres. Trump: I have just signed an Executive Order that will extend the Tariff Suspension on China for another 90 days - Truth Social Post.

- US Pres Trump: Confirms Dr. E.J. Antoni as nominee for Commissioner of the Bureau of Labor Statistics - Truth Social.

- (US) Pres. Trump: Tariffs are making our Country Strong and Rich!!! - Truth Social Post.

- (US) Pres Trump: Invoking Section 740 of DC Home Rule Act; DC Metro police placed under direct federal control; Deploying National Guard to DC.

- (BR) Brazil Fin Min Haddad: Virtual meeting with US Treasury Sec Bessent has been canceled; No new date has been set - TV interview.

- (US) US Pres Trump: Gold will not be tariffed - Truth Social post.

- (US) White House officials say that Fed Vice Chairs Bowman and Jefferson are being considered for Fed Chair post; Dallas Fed's Logan also under consideration - press.

Europe

- (IE) Ireland July Construction PMI: 47.1 v 48.6 prior.

- (UK) July BRC LFL Sales Y/Y: 1.8% v 2.0%e.

- (UR) Pres Zelenskiy: Reiterates need for pressure on Russia; Concessions won't persuade Russia to stop hostilities.

- (EU) European leaders and Ukraine Pres Zelenskiy to hold call with US Pres Trump on Weds (ahead of Putin/Trump meeting on Fri) - press.

- (UR) EU Foreign Policy Commissioner Kallas: EU foreign ministers expressed support for US efforts that will lead to a just peace in Ukraine [overnight update].

Levels as of 01:20 ET

- Nikkei 225 +2.4%, ASX 200 +0.3%, Hang Seng flat; Shanghai Composite +0.5%; Kospi +0.1%.

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

- EUR 1.1611-1.1629; JPY 148.02-148.45; AUD 0.6496-0.6526; NZD 0.5926-5947.

- Gold flat at $3,404/oz; BTC -2.6% at $118,820; Crude Oil +0.4% at $64.22/bbl; Copper +0.4% at $4.4505/lb.