PETER’S BUSINESS & FINANCE BRIEFING – Friday 18 July 2025, 06:00 Hong Kong
● Trump eyes tariff rate of 10% or 15% for more than 150 countries ● ACT drops its $46bn takeover of 7-Eleven owner ● TSMC raises 2025 outlook in big boost for AI demand hopes
Friday’s Opening Call
Hang Seng (Hong Kong) Projected Open: 24,679 +181 points +0.7%
Nikkei 225 (Japan) Projected Open: 40,040 +139 points +0.3%
Quick Summary - 4 Things To Know Before Asian Markets Open
Donald Trump said he would send letters to more than 150 countries notifying them their tariff rates could be 10% or 15% as he forges ahead with his trade agenda. “We’ll have well over 150 countries that we’re just going to send a notice of payment out, and the notice of payment is going to say what the tariff rate will be,” Trump told reporters on Thursday at the White House. “It’s all going to be the same for everyone, for that group,” Trump added, saying that the trading partners that would receive those letters were “not big countries, and they don’t do that much business.”
Stocks and the dollar staged a comeback Thursday as dip-buyers stepped in following Wednesday’s brief panic over Fed Chair Jerome Powell’s future after a White House official said the president was likely to soon remove Powell, after he floated the idea in a leaked meeting with congressional Republicans. Traders remain concerned that the US President may try to become the first in history to fire a Fed chairman, ending the Fed’s decades-long independence in setting monetary policy, and in the process, risk stoking a surge in inflation.
Canada’s Alimentation Couche-Tard has withdrawn its record-breaking US$46bn proposal to acquire Japan’s Seven & i Holdings, bringing an end to its year-long campaign to bring the 7-Eleven owner to the negotiating table on friendly terms. Couche-Tard, which owns the Circle K chain, on Thursday said a lack of “constructive engagement” by Seven & i had prompted it to withdraw the unsolicited takeover proposal that would have resulted in the largest foreign acquisition of a Japanese company.
Taiwan Semiconductor Manufacturing Co. (TSMC) raised its revenue outlook for 2025, boosting confidence in the global AI spending spree. The world’s biggest contract chipmaker forecast sales growth of about 30% in US dollar terms this year, up from a previous outlook of mid-20% growth. The forecast came on the heels of a reported 61% jump in profit for the June quarter.
Trump Eyes Tariff Rate of 10% or 15% For More Than 150 Countries
Donald Trump said he would send letters to more than 150 countries notifying them their tariff rates could be 10% or 15% as he forges ahead with his trade agenda. “We’ll have well over 150 countries that we’re just going to send a notice of payment out, and the notice of payment is going to say what the tariff rate will be”, Trump told reporters on Thursday at the White House. “It’s all going to be the same for everyone, for that group,” Trump added, saying that the trading partners that would receive those letters were “not big countries, and they don’t do that much business.” In an interview with Real America’s Voice broadcast later on Thursday, Trump said the rate would “be probably 10 or 15%, we haven’t decided yet.”
Over the past week, Trump has sent letters to the leaders of several countries, informing them of new duties that will kick in on August 1 if they cannot negotiate better terms with the US. The letters extended what was initially a July 9 deadline for another three weeks, setting off a frantic round of final negotiations. So far, deals have still not been concluded with major trading partners including the EU, Japan, Canada and India. The letters surprised partners such as the European Union, which had been hoping to conclude a framework agreement with the US. “We could possibly make a deal with Europe. You know, I’m very indifferent to it,” Trump said in the Real America’s Voice interview, suggesting he saw the letter he sent the EU as a deal.
Alicia Garcia Herrero, chief Asia Pacific economist at Natixis, said, “for much of the world, and Asia in particular, which faces among the highest levies, the rate announcement could be read as a positive, providing some certainty for smaller countries with a lower rate than initially threatened.” The rate also signals “Trump is realizing that too high tariffs are disruptive,” she said.
India Seeks Lower Tariff Than Indonesia In Race For Deal With US
Indian officials are hoping to secure a trade deal with Donald Trump at a lower tariff rate than he’d agreed with Indonesia as New Delhi races to meet an August 1 deadline. Trump said Tuesday the US will impose a tariff rate of 19% on imports from Indonesia, down from a threatened 32%, and will be able to ship American goods to the country tariff-free. The US president later told reporters that the India deal would be “along that same line” and “we’re going to have access into India.” On Wednesday, he again said the US was “very close” to a deal with India.
India is seeking more favourable rates than Indonesia and the 20% tariff Trump has said he’ll impose on Vietnam, officials in New Delhi said, according to a Bloomberg News report. The US and India are working toward a deal that would reduce proposed tariffs to below 20%, with a negotiating team currently in Washington to advance the talks. New Delhi is hoping for a tariff that would give it a competitive advantage against its peers in the region, the report said. India believes the US doesn’t view it as a transshipment hub like Vietnam and other Southeast Asian nations, and negotiations so far suggest India’s tariff rate would be better than those countries.
Thailand To Offer Trump No Duties On 90% Of Goods
Thailand is set to offer scrapping tariffs on 90% of US goods in a bid to avert a punishing levy threatened by Donald Trump. The new proposal would potentially eliminate tariffs and non-tariff barriers on about 10,000 US products, according to Chanintr Chalisarapong, vice chairman of the Thai Chamber of Commerce. Chanintr expects the final tariff on Thailand to be set in a range of 18% to 20% and says the new proposal could reduce Thailand’s trade surplus with the US by 70% within three years. Bangkok rushed to sweeten its proposal after Trump announced last week that a 36% tariff level on Thailand would start August 1. Finance Minister Pichai Chunhavajira, who had submitted a second proposal by then, said he was shocked and had been expecting a lower number.
Trump Softens Tone On China to Secure Xi Summit & Trade Deal
Donald Trump has softened his tone with China in an effort to secure a summit with Xi Jinping and a trade deal, according to people familiar with internal deliberations, Bloomberg News reported Wednesday. Trump is focused on cutting purchase deals with Beijing and celebrating quick wins, rather than addressing root causes of trade imbalances, the report said. Trump's gentler handling of China is causing a rift among his advisers, with some wanting to hold a tough line against Beijing and others supporting a more conciliatory approach, people familiar with the matter said.
This week exacerbated concerns that previous US red lines with China are now negotiable. The US government this week assured chip maker Nvidia that licenses for sales of its advanced H20 GPU to Chinese firms would be granted, the company said in a blog post, something multiple senior officials had previously said was not on the table. US Treasury Secretary Scott Bessent confirmed that development and said the granting of such licenses was among the offerings from the Trump administration in its talks with China. “You might say that that was a negotiating chip that we used in Geneva and in London,” he said. “It was all part of a mosaic. They had things we wanted. We had things they wanted, and we’re in a very good place.” The move reversed the administration’s own stated approach of keeping the most critical American technologies out of Beijing’s hands.
Some Trump officials have privately objected to granting licenses they say will only embolden China’s tech champions. Others have argued successfully that allowing Nvidia to compete with Huawei on its own turf is essential to winning the AI race with China. That view, championed by Nvidia Chief Executive Officer Jensen Huang, has gained traction inside the administration, people familiar with the matter told Bloomberg.
In a further effort to ease tensions, US officials are preparing to delay an August 12 deadline when US tariffs on China are set to snap back to 145% after the expiration of a 90-day truce. “I tell market participants not to worry about August 12,” the Treasury Secretary said, referring to the end of a 90-day reprieve announced in May. Bessent said talks between the world’s largest economies are in a “very good place.” Bessent said he hopes to meet with his counterpart Vice Premier He Lifeng soon, possibly in a third country, either before or after the Chinese leadership hold a meeting early next month. “We’re still working on it,” he said. “The Chinese leadership has a big conclave at the beginning of August. We’re trying to work out whether that could be in a third country either before or after that conclave.”
Bessent and his fellow US trade negotiators previously met with Chinese officials in Geneva in May, where they agreed to reduce their overall tariffs rates on each other. They held more talks in June in London, where they reached an understanding on easing export controls on semiconductors and rare earths.
Nvidia Boss Praises DeepSeek & Chinese AI In Beijing Visit
Nvidia boss Jensen Huang lauded DeepSeek and China’s other contributions to AI research as he met with political and tech leaders in Beijing. During a fireside chat with Wang Jian, a former Alibaba Group executive who helped create the company’s cloud unit, Huang said open-source Chinese AI models were helping the rest of the world, singling out DeepSeek’s AI research in particular. “It is incredibly well written. It is absolutely A-plus quality science and A-plus quality engineering,” he said. Huang’s trip comes as Nvidia jolted global tech stocks this week with news that the Trump administration would approve export licenses for the H20 allowing the company to resume sales of a much sought-after component to the world’s top semiconductor market.
China’s Belt & Road Investment & Construction Activity Hits Record
Investment and construction activity in China’s Belt and Road Initiative has hit a record this year, a study has found, totalling US$124bn over 176 deals in the first half of the year. Kazakhstan received the most investment of any individual BRI partner at US$23bn. The expansion in overseas markets and Beijing’s increased engagement with countries in the programme has contrasted with the US approach.
Chinese construction contracts and investments in BRI members in the first six months of the year is greater than the total of $122bn for the whole of 2024, according to a study by Australia’s Griffith University and the Green Finance & Development Center in Beijing. “The surge in Chinese engagement this year is surprising, even against the backdrop of steadily growing BRI activity since Covid,” said Christoph Nedopil Wang, the study’s author. “What sets 2025 apart is the scale: multiple megadeals each exceeding $10bn.” Wang said slow domestic growth and the need to diversify supply chains and markets due to the trade war sparked by Trump’s tariffs had prompted some Chinese companies to look abroad, while BRI countries saw “an opportunity to deepen ties with China amid shifting global geoeconomic dynamics”.
Overcapacity In China Hits Large US Firms
A record share of American firms froze investments in China as trade ties worsened earlier this year, according to a new survey. Fewer than half of the companies surveyed by the US-China Business Council (USCBC) between March and May said they planned to invest in China this year, a drop from 80% last year and a record low since the group began asking a similar question in 2006. While the survey was conducted before the easing of tensions following talks last month, the fall in sentiment underscores the damaging effect of the trade war.
The survey also showed that almost half of the big US companies operating in China have been adversely affected by overcapacity in the country. The survey found that overcapacity had hit 42% of respondents, up significantly from the 25% that reported an impact last year. “Rewards are falling and at the same we see an increase in risk . . . it shouldn’t surprise the Chinese government that investment is falling,” said Sean Stein, president of USCBC. The group said the survey results, released on Wednesday, showed that China’s overcapacity problems have spread from primarily affecting industrial sectors such as steel to broader swaths of the economy, including healthcare and consumer goods. 81% of affected companies said the overcapacity crisis was driving down prices in their sectors. Companies also reported shrinking profit margins.
Chinese officials have vigorously disputed complaints by its trading partners, including the US and EU, that its industrial policies and subsidies were flooding global markets with artificially low-priced goods and outcompeting local enterprises. More recently, however, China’s leadership has acknowledged the consequences of overcapacity, using the term “neijuan” or “involution” to denounce excessive price competition in some sectors. President Xi Jinping and other leading officials have penned a number of articles attacking overproduction and price competition caused by neijuan. China’s state council, or cabinet, on Wednesday called on the electric vehicle industry to “strengthen industry self-discipline” and reduce “irrational competition” in prices, state news agency Xinhua reported.
Premier Li Qiang Urges Tighter Price Oversight
Chinese Premier Li Qiang has called for tighter pricing regulation in the electric car sector during a high-level meeting Wednesday, as Beijing sought to rein in the cut-throat price wars that are fuelling deflationary pressures in the economy. In singling out the country’s electric-vehicle sector, Li urged strengthened cost oversight and price monitoring. He also called on major automakers to make timely payments to suppliers while practicing greater self-discipline in setting prices. Automakers should improve their competitiveness through technological innovation and quality upgrades, Li said.
Profits for Chinese carmakers dropped 11.9% year over year in May, even as sales volume of cars in the country rose 11.7% during the same period, according to the China Association of Automobile Manufacturers, with over half of them being new energy vehicles. The auto industry association in May called to halt the “vicious competition,” which it said has bitten into businesses’ profitability and threatened the security of the supply chain.
Sluggish consumer demand has also strained profit margins for businesses. Li also called for renewed efforts to boost domestic consumption, remove “unreasonable restrictions that thwart household spending” and optimize policies for a consumer goods trade-in program. The National Statistics Bureau’s deputy head Sheng Laiyun said at a press briefing Tuesday that there has been progress made in the solar panel, cement and automobile industries in easing such price cuts without government intervention.
Australian Unemployment At Four-Year High
Australia’s unemployment unexpectedly climbed to a four-year high in June as hiring almost stalled, suggesting a loosening of the labour market and bolstering the case for the Reserve Bank to reduce interest rates next month. The jobless rate increased to 4.3%, the highest level since November 2021 and exceeded forecasts for an unchanged 4.1%. Employment rose by 2,000 driven entirely by part-time roles. Economists had expected a 20,000 gain.
The data sent the Australian Dollar more than a half percent lower. The yield on policy-sensitive three-year government bonds fell almost 10 bps while stocks advanced. Money market bets firmed to fully price a cut in August and another after that, with a better than 50% chance of a third. The central bank has cut twice since the start of the year, surprising the market last week with a decision to hold at 3.85%, and yesterday’s weak jobs report, following a subdued reading in May, could suggest a resumption of cuts.
According to Ryan Wells, an economist at Westpac Banking Corp, "The data strengthen the already-strong case to deliver the next rate cut in August" and James McIntyre, economist, says the undershoot in Australia's job gain "all but locks in another rate cut at the RBA's August meeting".
Japan’s Exports Fall For Second Straight Month
Japan’s exports in June contracted 0.5% year-on-year, extending the 1.7% drop seen in May as shipments continued to decline for the second straight month. The decrease in exports was a reversal of the 0.5% rise expected by economists polled by Reuters and comes amid a lack of a breakthrough in trade talks with the US.
Exports to China, Japan’s largest trading partner, were down 4.7%, while shipments to the US declined by 11.4% y/y, deepening from the 11% fall in May. The decline in exports to the US was the largest since the start of the Covid-19 pandemic in 2020. Japan’s trade surplus narrowed to ¥153.1 billion in June 2025, from ¥221.3 billion a year earlier and well below market expectations of a ¥353.9 billion surplus.
The data comes as Japan now faces a 25% “reciprocal tariff” from the US that will take effect on August 1, one percentage point higher than the 24% announced on “Liberation Day.” Exports, including services, made up almost 22% of Japan’s GDP in 2023, according to the latest data from the World Bank.
Since April 3, Japanese automobiles imported into the US have also faced a 25% tariff. Auto exports to the US are a cornerstone of Japan’s economy, making up 28.3% of all shipments in 2024, according to customs data. However, data from the trade ministry showed that exports of automobiles, which include cars, buses and trucks, to the US fell 26.7% in June, extending from May’s 24.7% plunge. On July 8, Japan’s top negotiator Ryosei Akazawa reportedly said that any deal with the US must include a removal of tariffs on the auto sector for the country.
China Youth Jobless Rate Lowest In A Year
China’s youth jobless rate for 16- to 24-year-olds, excluding college students, fell to 14.5% in June from 14.9% in the previous month, marking the lowest reading since June 2024, according to data from the National Bureau of Statistics released Thursday. Meanwhile, the surveyed jobless rate in the country held at a six-month low of 5% in June, matching consensus forecasts.
Beijing recently introduced new employment-stabilization measures amid ongoing trade tensions with the US and elevated youth unemployment. To ease pressure on the labour market, the State Council announced that local governments will increase unemployment insurance refund rates, raising them to 90% for small firms (from the prior 60%) and 50% for large firms (from 30%). Companies grappling with operational difficulties may also apply to defer payments to pension, unemployment, and workplace injury insurance schemes.
Hong Kong Jobless Rate Unchanged At 3.5%
Hong Kong’s seasonally adjusted unemployment rate remained unchanged at 3.5% in the three months ending June, matching the previous period and holding at May’s peak which was the highest level since December 2022. The number of unemployed people remained stable at around 136,200, while total employment dropped by 7,400 to 3.66 million. Unemployment increased mainly in the construction sector and food and beverage service activities sector, while it decreased in the arts, entertainment and recreation sector, and professional and business services sector. The youth unemployment rate (ages 20–29) rose to 6.8% in June, marking the highest level since November 2022. Meanwhile, the labour force participation rate remained unchanged at 56.7%.
Singapore’s Non-Oil Domestic Exports Jump To 11-Month High
Singapore’s non-oil domestic exports surged 13% in June compared to the same period last year, surpassing the 5% growth forecast by economists polled by Reuters. The latest reading also surpassed the revised 3.9% decline in the previous month, government data showed Thursday. This is the sharpest increase since July 2024. It comes on the back of higher shipments of electronic products, non-monetary gold and specialized machinery. On a month-on-month basis, Singapore’s NODX surged 14.3% in June, compared to a 12% decline seen in May.
US Initial Jobless Claims Fall to 3-Month Low
US jobless claims are suggesting that the labour market remains strong. The figure for seasonally adjusted initial claims was 221,000 for the week ending July 12, marking a decrease of 7,000 from the previous week's revised level, according to US Department of Labor data. It was the lowest number of new claims in one week since April. In the meantime, outstanding claims were broadly unchanged at 1,956,000 in the previous week, remaining below the 2021 highs touched in June. The results continued to reflect a historically strong labour market.
US Retail Sales Top Forecasts
US retail sales rose 0.6% in June, bouncing back from May’s sharp 0.9% drop, according to new data from the US Census Bureau. That beat the 0.2% headline retail sales estimate. Sales were up 3.5% from last year. Meanwhile, sales excluding food services, auto dealers, building materials stores and gasoline stations, which are used to calculate GDP, were up 0.5%, following a downwardly revised 0.2% increase and also above expectations of 0.3%. The rebound suggests resilience in household demand and supports the case for the Federal Reserve to keep interest rates unchanged for now.
US Homebuilders Cut Prices At Fastest Pace In 3 Years
US homebuilders continue to see weakening demand from potential buyers concerned about the broader economy. As a result, they are cutting prices at the highest rate in three years, according to the monthly builder confidence survey from the National Association of Home Builders. Builder confidence in July rose 1 point to 33 on the NAHB index, a slight improvement. Still, anything below 50 is considered negative sentiment. The index stood at 41 last July, and it has been in negative territory now for 15 straight months.
38% of builders said they cut prices in July, the highest share since NAHB began tracking the metric in 2022. Just 29% were cutting back in April. The average price reduction was 5% in July, where it has been every month since November.
Philadelphia Factory Activity Rebounds Strongly In July
The Philadelphia Fed Manufacturing Index jumped to 15.9 in July, its first positive reading after three consecutive months in negative territory and the highest level since February. Rebounding from -4.0 in June and far exceeding market expectations of -1, the index signalled a strong recovery in regional manufacturing and renewed optimism about the sector’s outlook. Forward looking indicators improved as well, with the future activity index rising 3 points to 21.5, suggesting firms remain optimistic about growth over the next six months.
ACT Drops Its $46bn Takeover Of 7-Eleven Owner
Canada’s Alimentation Couche-Tard has withdrawn its record-breaking US$46bn proposal to acquire Japan’s Seven & i Holdings, bringing an end to its year-long campaign to bring the 7-Eleven owner to the negotiating table on friendly terms. Couche-Tard, which owns the Circle K chain, on Thursday said a lack of “constructive engagement” by Seven & i had prompted it to withdraw the unsolicited takeover proposal that would have resulted in the largest foreign acquisition of a Japanese company. Seven & i said it was disappointed by Couche-Tard's decision and disagreed with the company's characterization of events.
Couche-Tard said in a letter to Seven & i’s board, “there has been no sincere or constructive engagement from 7 & i that would facilitate the advancement of any proposal.” It added, “you have engaged in a calculated campaign of obfuscation and delay, to the great detriment of 7 & i and its shareholders.”
The 2024 bid by the Canadian group, which placed a hefty 48% premium on the pre-bid value of the target company, had prompted large numbers of event-driven hedge fund investors to hold the stock. Traders are predicting a heavy sell-off of Seven & i’s shares, given the large number of hedge funds that had bought the stock on the expectation that the deal would ultimately succeed. There was scepticism over the company’s plan to deliver value through changes that include a deal to sell off less-profitable retail operators, a listing of its US business, a ¥2 trillion share buyback and the recent appointment of Stephen Dacus as chief executive officer.
China Threatens To Block Panama Ports Deal Unless Cosco Involved
China’s government is threatening to block a deal that would transfer ownership of dozens of seaports to Western investors if Cosco, China’s largest shipping company, doesn’t get a stake, the Wall Street Journal reported Thursday. The proposed sale includes two ports at the Panama Canal and more than 40 others around the world, all owned by Hong Kong-based CK Hutchison. China is pushing for state-owned Cosco to be an equal partner and shareholder of the ports with BlackRock and Mediterranean Shipping Co., a containership operator, according to the WSJ. BlackRock and MSC in March reached a preliminary agreement to buy the ports in a deal valued at nearly US$23 billion. Now, BlackRock, MSC and Hutchison all are open to Cosco’s taking a stake, the report said.
New World Seeks To Sell 11 Skies Airport Mall In Hong Kong
New World Development is looking to sell its flagship 11 Skies airport mall in Hong Kong to address liquidity constraints, according to Bloomberg News. The property has been evaluated at a price range of HK$15 billion (US$1.9bn) to HK$17 billion, a potential loss on the HK$20 billion it invested in what was once billed as Hong Kong’s largest shopping mall. Once a symbol of Hong Kong’s property boom, the developer has been fighting for months to shore up its balance sheet by accelerating asset sales, including in mainland China. Now, New World is gearing up to sell its China properties piecemeal, including landmarks like its K11 buildings in Hangzhou, Shenzhen and Shanghai. An $11 billion refinancing has so far failed to provide the lifeline the Hong Kong developer needed. The company is also seeking to raise as much as $2 billion through a new loan facility, backed by its crown jewel, the Victoria Dockside complex in Hong Kong, underscoring the urgency of its capital-raising efforts.
Controlled by the family empire of Hong Kong tycoon Henry Cheng, New World has one of the highest debt burdens of any big developer in the city. Its net debt reached 95.5% of shareholders’ equity as of December. The firm reported its first annual loss in 20 years for the 12 months ended June 2024.
HK’s $25bn Pile Of Soured Debt Spurs Talks to Form ‘Bad Bank’
The pile of non-performing loans at Hong Kong lenders has grown so large that some in the industry have discussed the creation of a “bad bank” to soak up the financial hub’s soured debt. Talks between some of the city’s biggest banks are preliminary, according to Bloomberg News sources, but they underline growing concerns over a bad loan buildup. Soured loans increased to US$25 billion at the end of March, or 2% of the total and a two-decade high, Fitch Ratings estimates, based on Hong Kong Monetary Authority figures.
Hong Kong’s banks are coming under increasing pressure to offload loans backed by real estate assets after rolling them over or amending the original terms in the past to avoid write downs. Jason Bedford, a former UBS analyst, said, "we should be seeing more distressed sales — it's a little alarming that we're not". “There’s too much supply of commercial real estate, particularly office space, hence we continue to see Hong Kong banks’ asset quality deterioration stemming from the sector this year,” said Savio Fan, an analyst at Fitch.
The Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, said Thursday it had no plans to establish a “bad bank”, saying that the local banking sector remained healthy and profitable. “Overall, banks in Hong Kong maintain a healthy balance sheet; their credit risk is manageable, and provisions are sufficient,” the authority said in a statement on Thursday. “The HKMA has no intention to set up the rumoured ‘bad bank’. We understand that the relevant banks also do not have such a plan.” The banking regulator saw no need to create a bad bank, as the current provisions for bad debts at banks were already sufficient, an HKMA representative added.
Samsung Boss Cleared Of Fraud By South Korea's Top Court
Samsung boss Lee Jae-yong has been cleared by South Korea's top court of fraud charges, concluding a years-long legal battle over his role in a 2015 merger deal. Lee, the grandson of Samsung's founder and the de facto head of the company since 2014, had been accused of using stock and accounting fraud to try to gain control of the firm. In its final verdict, the Supreme Court in Seoul upheld a not guilty verdict, after Lee was acquitted of all charges in two earlier trials.
Prosecutors accused Lee and his advisors of inflating the value of his pharmaceutical firm, Samsung Biologics, through fraudulent accounting. They argued that the higher value allowed him to buy a larger share of a key Samsung subsidiary in a 2015 merger deal, which secured his succession. Prosecutors also said the merger was designed to shift control of the company from Lee's father, Lee Kun-hee.
The court's decision was welcomed by the country's business community. The Federation of Korean Industries said in a statement that the ruling will allow swift decisions at the top of Samsung, which will help the economy navigate trade turmoil with the US.
TSMC Raises 2025 Outlook
Taiwan Semiconductor Manufacturing Co. (TSMC) raised its revenue outlook for 2025, boosting confidence in the global AI spending spree. The world’s biggest contract chipmaker forecast sales growth of about 30% in US dollar terms this year, up from a previous outlook of mid-20% growth. The forecast came on the heels of a reported 61% jump in profit for the June quarter and underscores resilient demand for high-end artificial intelligence chips from the likes of Nvidia and Advanced Micro Devices. TSMC on Thursday said net income for the June quarter was NT$398.3 billion (US$13.5bn), extending a streak of beating analysts’ estimates that dates back to 2021.
Chief Executive Officer C.C. Wei said AI orders "still run hot" and underlying AI demand is strengthening, despite uncertainty around US tariffs. He sought to dispel persistent speculation that tech firms may curtail spending. TSMC wasn’t hiking its outlook on news the US is prepared to grant Nvidia licenses to export its H20 AI chip to China, Wei told reporters. While that resumption in sales was positive for the industry, it was too early to quantify the impact, he added.
This is “supporting the AI value chain, and AI optimism still holds,” said Billy Leung, investment strategist at Global X ETFs in Sydney. “For investors, TSMC results again ease fears of an AI slowdown. Margins hold, demand outlook good, generally reinforces the AI buildout is still well underway.”
Global Markets Recover From Wednesday’s Powell Shock
Stocks and the US dollar staged a comeback Thursday as dip-buyers stepped in following Wednesday’s brief panic over Fed Chair Jerome Powell’s future after a White House official said the president was likely to soon remove Powell, after he floated the idea in a leaked meeting with congressional Republicans. The New York Times reported that Trump had drafted a letter firing Powell and showed it to lawmakers during the meeting at the White House. Stocks, the dollar and long-term US government bonds quickly retreated, while short-term Treasuries rallied on speculation that whomever Trump appoints to replace Powell will bend to the president’s will and cut interest rates. Yet in less than an hour, the moves were unwound after the president downplayed the possibility, saying he was “not planning” to fire Powell, "unless he has to leave for fraud." Trump suggested he could try to remove Powell for cause, arguing the Fed overspent on renovations. Trump has been criticising Powell almost daily for moving too slow on cutting rates.
Traders remain concerned that the US President may try to become the first in history to fire a Fed chairman, ending the Fed’s decades-long independence in setting monetary policy, and in the process, risk stoking a surge in inflation. “The markets are taking this as a credible threat,” said Joe Gilbert at Integrity Asset Management. “This is unsettling, and it remains to be seen if this is just a trial balloon by Trump to gauge market sentiment if indeed he follows through with firing Powell. Ultimately, we believe the legal hurdles will be too substantial to remove Powell.”
Federal Reserve Bank of New York President John Williams leaped to Powell’s defence, saying the current interest rate policy is “entirely appropriate.” He said he expects tariffs to have a bigger impact on inflation in the months ahead, making the US central bank’s current restrictive stance “entirely appropriate.” “Although we are only seeing relatively modest effects of tariffs in the hard aggregate data so far, I expect those effects to increase in coming months,” Williams said in remarks prepared for an event organized by the New York Association for Business Economics. “Maintaining this modestly restrictive stance of monetary policy is entirely appropriate.” Williams said he sees tariffs adding about one percentage point to inflation through the second half of the year and into 2026, and a weaker dollar "likely will add somewhat to inflationary pressure going forward". Williams stressed the importance of an independent central bank to the health of the country's economy, saying it "delivers better results for the country, for the people of the country, in terms of price stability, economic stability".
Asian Markets Stabilise After Powell Ouster Threats
Asian markets mostly rose Thursday, following a volatile session on Wall Street. Japan’s Nikkei 225 added 0.6% to close at 39,901. South Korea’s Kospi index moved up 0.2%. Singapore stocks extended their rally for the ninth day to a fresh high. The Straits Times Index closed 0.7% higher at 4,161. Australia’s S&P/ASX 200 benchmark ended the day 0.9% higher. India’s BSE Sensex index lost 0.5% to close at 82,259.
Canada’s Alimentation Couche-Tard has withdrawn its record-breaking US$46bn proposal to acquire Japan’s Seven & i Holdings. Shares in Seven & i fell 9.2% on Thursday to ¥2,008, which is 22% below the Couche-Tard offer price.
Shares of SK Hynix plunged 9.0% Thursday on profit-taking in the backdrop of a weakening outlook for memory semiconductor prices. Goldman Sachs reportedly downgraded the stock to a neutral rating, noting that SK Hynix’s “operating profit for 2026 is expected to decrease compared to this year.”
Mainland Chinese & Hong Kong Stocks Mixed
Mainland Chinese and Hong Kong stocks were mixed on Thursday. At a meeting chaired by Premier Li Qiang on Wednesday, authorities pledged to curb ‘irrational competition’ in the EV sector. “The rise of the ‘anti-involution’ campaign has sparked investors’ hope for decisive reflation, reminiscent of the 2015-18 supply-side reform,” Morgan Stanley economists including Robin Xing said in a report this week. “Anti-involution” refers to efforts to root out China’s industrial malaise, marked by cutthroat price wars and overcapacity that have hurt profitability across industries.
The mainland’s CSI 300 moved up 0.7% to 4,034. In Hong Kong, the Hang Seng Index was 19 points lower, or 0.1%, at 24,499. The Hang Seng Tech Index climbed 0.6%. Auto shares climbed 1.7% after officials vowed to curb aggressive competition and price wars in the EV market.
European Markets Boosted By Tech
European markets rose Thursday following a raft of earnings reports. The Pan-European Stoxx 600 index closed 1.0% higher. London’s FTSE 100 saw gains of 0.5%. France’s CAC 40 climbed 1.3% while Germany’s DAX added 1.5%.
European chip-related stocks rallied on the TSMC news. ASML (+3.9%), ASMI (+3.5%), BE Semiconductor (+6.3%), Technoprobe (+3.1%), and SUSS MicroTec (+1.8%) were all higher on the day.
Shares of Sweden-based automaker Volvo Cars rose 7.9% on Thursday as the company’s second-quarter operating profit beat analyst expectations despite a sharp year-on-year decline. Volvo Cars, which is owned by China’s Geely Holding, on Thursday reported that second-quarter operating profit fell to 2.9 billion Swedish kronor (US$297.83mn), down from 8 billion during the same time last year. Volvo Cars, which is widely considered as one of the most exposed European carmakers to US tariffs, said the result reflects an ongoing challenging environment for the automotive industry. The stock price remains down 20% year-to-date.
Shares of Ocado surged by 18.5% after the online-only British supermarket said its “core priority” was to turn cash flow positive during the next financial year. In its half yearly update to investors, the company said its topline grew 13% year-on-year to £674 million (US$903mn). Despite the jump, the stock is down 8% year-to-date and is also among the most shorted on the London Stock Exchange.
Shares of EasyJet closed 4.9% lower after the company said strike action by French air traffic controllers and higher fuel prices dented quarterly performance. The low-cost airline said French ATC industrial action cost the company £15 million (US$20.1mn), while fuel accounted for a £10 million hit in the fiscal third quarter ending in June.
Swiss pharmaceutical giant Novartis beat profit expectations for the second quarter and announced the start of a $10 billion share buyback programme. Shares of Novartis fell 1.9% but are up over 5% year-to-date.
Germany rejected the European Commission’s proposal for an expanded €2 trillion budget, hours after it was announced by Commission President Ursula von der Leyen. The German government chief spokesman said, "a comprehensive increase in the EU budget is unacceptable" and Berlin also rejects the proposal for an additional taxation of companies. The unexpectedly harsh comments signal that she faces a battle to win support for her plans.
US Stocks Recover From Powell Panic To Reach Record Highs
US Stocks rose to new records Thursday following Wednesday’s brief panic over Fed Chair Jerome Powell’s future. Economically sensitive shares outperformed after solid retail sales and a drop in jobless claims. The S&P 500 added 0.5% for a record close of 6,297, its ninth this year. The tech-heavy Nasdaq Composite advanced 0.7% for its tenth record close of 2025, ending at 20,884. Both indexes also touched fresh intraday all-time highs. The Dow gained 230 points, or 0.5%, and settled at 44,484. This week, the S&P 500 is on pace for a 0.6% advance, while the Dow is tracking for a 0.3% gain. The Nasdaq is the outperformer thus far, up about 1.5% in the period.
Tech stocks outperformed, powered by bullish earnings from TSMC. Shares of the chip manufacturer added 3.4% after the company’s second-quarter profit rose 61% from the year prior, hitting a record high and beating estimates.
Elsewhere on the results front, PepsiCo (+7.5%) and GE Aerospace (-2.2%) both posted better-than-expected earnings. United Airlines shares rose 3.1% despite releasing a lacklustre full-year earnings forecast. Around 50 S&P 500 components have reported thus far, with 88% of those exceeding analysts’ expectations, FactSet data shows.
After the closing bell, Netflix posted earnings that beat estimates as revenue grew 16% in the second quarter to US%11.1 billion. Net income rose 45% in the second quarter from the year before to US$3.1bn. Earnings per share of $7.19 were up 47% from a year ago and were higher than Wall Street had expected. Netflix raised its revenue forecast for the rest of the year, thanks to a weakening US dollar and expected strong growth in advertising and new subscribers. The streamer’s shares have risen 42% this year as it has expanded its offerings of live content. Netflix shares dipped around 1% in after-hours trading.
Short Dated Bonds Fall
Treasury two-year yields rose while those on 30-year bonds were little changed. The yield on the 2-year note climbed 1 bp to 3.91%. The 10-year was unchanged at 4.45%. Traders have scaled back expectations for rate cuts in 2025, with markets now pricing in fewer than two reductions this year, down from three anticipated earlier in July.
US Dollar Rises To Over 3-Week High
The US dollar index climbed 0.4% to 98.66 on Thursday, reaching its highest level in over three weeks, after stronger-than-expected retail sales data eased concerns about consumer spending. Among Asian currencies, the South Korean won fell 0.3% to around 1,391 per dollar on Thursday, its weakest level in nearly two months. The offshore Chinese yuan was 0.1% lower at around Rmb 7.1850 per dollar.
The Japanese yen fell 0.5% to ¥148.60 per dollar on Thursday, as investors reacted to disappointing trade figures that fuelled concerns about a potential technical recession. Japan’s trade surplus narrowed to ¥153.1 billion in June 2025, from ¥221.3 billion a year earlier and well below market expectations of a ¥353.9 billion surplus. Exports fell 0.5% y/y, marking a second straight monthly decline and missing forecasts of a 0.5% gain.
Gold Declines After Strong US Data
Gold prices fell 0.3% to $3,339 per ounce on Thursday, erasing the slight gain from the prior session as evidence of a strong US economy limited the urgency for the Fed to cut interest rates. Headline and control retail sales rose more than expected in June, while initial unemployment claims fell for the fifth week to a three-month low.
Oil Gains On Demand Optimism
Brent crude oil futures rose 1.3% to $69.59 per barrel on Thursday, halting a three-day losing streak, supported by upbeat economic data from major oil consumers and signs of easing trade tensions.
Bitcoin Near Record High
Bitcoin was close to a record high after the US Congress delivered a watershed victory for the crypto industry on Thursday, passing the first federal legislation to regulate stablecoins and clearing the way for broader use of the technology in everyday finance. Bitcoin was down 0.5% over the past 24 hours at $119,200 after moving above $120,000 for the first time last week.
Peter Lewis’ Money Talk Podcast
On Friday’s “Peter Lewis’ Money Talk” podcast, I’ll be joined by Francis Lun, the CEO of GEO Securities, and Carlos Casanova, Senior Asia Economist at UBP. With a view from Australia, is Toby Lawson, former CEO at Statton Partners.
The podcast is also available on Apple Podcasts, YouTube Studio and Spotify.
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https://www.youtube.com/playlist?list=PLnwqOJD9ie5gHH29bNfuG1Nscy8rdJo6O
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This podcast is sponsored by Surfin Group, which is headquartered in Singapore and offers online financial services to 60 million customers across 10 countries. You can find out more about them by going to their website www.surfin.sg
