PETER’S BUSINESS & FINANCE BRIEFING – Monday 14 July 2025, 06:00 Hong Kong
● Trump says US to impose 30% tariffs on EU & Mexico from Aug. 1 ● Rubio says Xi-Trump summit likely ● Bitcoin continues its run to new all-time highs
Monday’s Opening Call
Hang Seng (Hong Kong) Projected Open: 23,972 -167 points -0.7%
Nikkei 225 (Japan) Projected Open: 39,490 -80 points -0.2%
Quick Summary - 4 Things To Know Before Asian Markets Open
In his latest tariff ultimatum, Donald Trump said he will impose a 30% rate on the European Union and Mexico. Trump made the announcement in two letters posted to social media Saturday as he informed key trading partners of new rates that will kick in on August 1 if they cannot negotiate better terms. The EU had been hoping to conclude a tentative deal with the EU to stave off the tariff, but Trump’s letter dulled optimism for an 11th-hour agreement between the major economies. “The European Union will allow complete, open Market Access to the United States,” Trump said, or “whatever the number you choose to raise them by, will be added on to the 30% that we charge.” In his letter to Mexico, Trump said the country has been “helping me secure the border,” but added that it wasn’t enough.
China should add as much as 1.5 trillion yuan (US$209bn) in fresh stimulus to boost consumer spending and maintain currency flexibility to counter the effects of US tariffs, academics including an adviser to the country’s central bank said. The Chinese economy has been facing “new disruptions” since April, when US levies jumped, in addition to persistent deflation, experts including Huang Yiping, a member of the monetary policy committee of the People’s Bank of China, wrote in a report. The authorities should consider an additional 1-1.5 trillion yuan package over 12 months to lift household consumption to mitigate damages to the economy from 20%-30% US tariffs, they wrote. That compares with 300 billion yuan that central authorities plan to borrow this year.
US Secretary of State Marco Rubio said a summit between Donald Trump and Xi Jinping is likely after the top diplomats from the two countries met in Malaysia. Rubio said he had a “very constructive and positive” sit-down with Chinese Foreign Minister Wang Yi on Friday, building on momentum in bilateral ties after Trump earlier last week described their recent relations as “really good.” The gathering was seen as a prelude to a possible leadership summit, which Trump said he’d like to happen this year.
Bitcoin continued its run on Friday to new all-time highs, climbing as much as 4.5% to a record of $118,861, according to CoinDesk data, notching a new intraday high for a third straight day. The biggest digital asset by market value is up around 26% this year. Investors rushed into Bitcoin ETFs, pouring in a net US$1.2 billion on Thursday. Trading in the options markets suggest the rally could continue. Longer-term call options expiring in late September and December have seen elevated open interest at strike prices of $140,000 and $150,000.
Trump Says US To Impose 30% Tariffs On EU & Mexico From Aug. 1
In his latest tariff ultimatum, Donald Trump said he will impose a 30% rate on the European Union and Mexico. Trump made the announcement in two letters posted to social media Saturday. In his letters to the EU and Mexico, Trump warned that if either trade partner retaliated with import duties of their own against the US, he would hit back by raising tariffs by a similar percentage over and above the 30%.
In the letter sent on Friday to European Commission President Ursula von der Leyen, Trump wrote, "we have had years to discuss our trading relationship with the European Union and have concluded that we must move away from these long-term-large, and persistent, trade deficits, engendered by your tariff, and non-tariff, policies and trade barriers. "Our relationship has been, unfortunately, far from reciprocal," the letter added as he demanded “complete, open Market Access to the United States.” The EU had been hoping to conclude a preliminary agreement with the EU to stave off the tariff, but Trump’s letter dulled optimism for an 11th-hour deal between the major economies.
In his letter to Mexico, Trump said the country has been “helping me secure the border,” but added that it wasn’t enough. “Mexico still has not stopped the Cartels who are trying to turn all of North America into a Narco-Trafficking Playground. Obviously, I cannot let that happen!” Trump said in the letter to Mexican President Claudia Sheinbaum.
Mexico criticised what it called Trump's "unfair deal" and insisted its sovereignty was non-negotiable, while von der Leyen threatened to take "proportionate countermeasures", if needed. Both said they wanted to keep negotiating with the US. Von der Leyen said on Sunday that the application of tariffs to €21bn of annual US exports to the EU, including chicken, motorcycles and clothes, that were due to come into effect on July 15 would be suspended until early August. “We have always been clear that we prefer a negotiated solution with the US. This remains the case,” she said.
Trump’s New Tariff Threats
In his latest tariff salvos last week, Trump has threatened universal levies while slapping higher tariffs on Canada. Trump Friday raised the prospect of increasing levies on most countries. He told NBC News that he's eyeing blanket tariffs of 15% to 20% on most trading partners, an increase from the current global baseline minimum tariff rate for nearly all US trading partners of 10%. “We’re just going to say all of the remaining countries are going to pay, whether it’s 20% or 15%. We’ll work that out now,” NBC quoted Trump as saying. “I think the tariffs have been very well-received. The stock market hit a new high today,” Trump added, according to the report.
He also threatened a 35% tariff on some Canadian goods, to take effect from August 1. Trump said in a letter to Canadian Prime Minister Mark Carney that Canada has many "Tariff, Non-Tariff, Policies and Trade Barriers, which cause unsustainable Trade Deficits against the United States". As justification for his threatened tariffs on Canada, Trump repeated discredited claims about the flow of fentanyl across the US-Canada border. The newly announced rate is an increase from the current 25% tariff that’s imposed on US imports from Canada that aren’t shipped under the terms of the US-Mexico-Canada Agreement (USMCA). Most of Canada’s exports to the US fall under the rules of USMCA and are expected to remain exempt.
In response to Trump, Canadian Prime Minister Mark Carney said that Canada would continue to defend workers and businesses as it continues negotiating with the US ahead of the August 1 deadline. He added in the post on X that Canada has made “vital progress” in combating fentanyl in North America and is committed to working with the US on the issue.
Trump spent last week sending missives to trading partners. 25 nations or economic blocs have so far received letters from Trump setting new tariff levels from the start of August. The countries that received letters last week, and the rates they face are:
● Brazil: 50%
● Laos, Myanmar: 40%
● Cambodia, Thailand: 36%
● Bangladesh, Serbia, Canada: 35%
● Indonesia: 32%
● EU, Mexico, Algeria, Bosnia & Herzegovina, Iraq, Libya, South Africa, Sri Lanka: 30%
● Brunei, Japan, Kazakhstan, Malaysia, Moldova, South Korea, Tunisia: 25%
● The Philippines: 20%
Trump’s letters outlined rates that matched or were close to the original “reciprocal” levies he set in April. As he relaunched his trade war last week, Trump announced a new tariff of 50% on copper imports and said he was considering whether to hit pharmaceutical goods with a 200% levy.
But far from securing 90 deals in 90 days, as pledged by Trump’s trade advisor Peter Navarro, the US has secured just three deals, by its own count. These are a limited deal with the UK that offers some lowered tariff quotas on both sides, a tariff truce with China and Trump’s announcement that he would apply tariffs of between 20% and 40% on goods from Vietnam, a major exporter to the US. He said Hanoi would allow the US to sell goods into its market tariff-free. No written text outlining the Vietnam and China deals has been made public. Talks with other countries, including major trading partners and allies such as Japan, South Korea, India and the EU, have not concluded ahead of the 90-day pause.
The Canada letter is “a big shock, still meaningful for the Canadian economy, and the cadence at which he’s issuing these letters and threatening to put universal tariffs on other countries is very, very negative for financial markets more generally,” said Karl Schamotta, chief market strategist at Corpay. “It does look as if negotiations between Trump and Canada and many other countries have essentially been irrelevant to the process. And so, unfortunately, the interpersonal relationship that many leaders have invested in building with Mr. Trump, that effort has largely been wasted,” he said.
Lula Tells Trump Brazil Can Survive Without US Trade
In Brazil, President Luiz Inacio Lula da Silva insisted his country could survive without US trade and would look elsewhere. Lula stated that Brazil's trade with the US represents 1.7% of its GDP and that "it's not like we can't survive without the US". Lula said he would seek to talk with business leaders affected by the tariffs, and that Brazil will attempt to exhaust negotiations before retaliating under a new trade reciprocity law. He reiterated his stance that Trump must respect Brazil’s sovereignty and that the US president cannot act as if he owns other nations. He made clear that he had no intention of standing down, saying during an interview on Globo TV that the tariff fight could be “endless.”
Trump on Wednesday said he would impose 50% tariffs on Brazilian goods, far higher than the 10% initially announced in April. He made his threats in a letter that cited the legal woes of Jair Bolsonaro, the right-wing former president and Lula rival who is facing trial on charges that he attempted a coup following his 2022 election defeat. The US is Brazil’s second-largest trading partner, following only China. Bloomberg Economics estimates that a 50% tariff would risk a 1% hit to Brazil’s economy. The levies could cause a 60% reduction in total US imports of goods from Brazil, although the South American nation could divert some exports to other markets.
Lula said countries like his are not obliged to continue using the dollar to trade, reiterating remarks he made at the BRICS summit in Rio de Janeiro that he acknowledged “likely worried Trump.” “We are interested in creating a trade currency among other countries,” Lula said in the interview. “I’m not obligated to buy dollars to conduct trade with Venezuela, Bolivia, Chile, Sweden, the European Union, or China. We can trade in our own currencies.”
Vietnam Surprised By Trump Tariff Announcement
Vietnam’s leadership was caught off guard by Donald Trump’s announcement last week that it had agreed to a 20% tariff, and the Southeast Asian nation is still seeking to lower the rate, according to Bloomberg News. Straight after last Wednesday’s call with Trump, Vietnam’s party chief To Lam told his negotiating team to keep working to bring the tariff rate down, the report said. The 20% figure came as a surprise as Vietnam believed it had secured a more favourable tariff range. Before the call, Vietnam had been pushing for a tariff in the 10%-15% range.
The country’s Ministry of Foreign Affairs said trade negotiators were still coordinating with their US counterparts to finalize the details of the agreement. More than a week after it was first revealed by Trump, neither side has published any kind of detailed outline, providing little clarity on how the 20% rate or the 40% levy on goods deemed to be transshipped through the country will be enacted or enforced.
Throughout the negotiations, the US demanded more action from Hanoi to prevent Chinese goods being rerouted and repackaged through Vietnam to skirt higher tariffs. Beijing said it was examining the trade agreement and would retaliate if its interests were hurt.
While in Brazil for the BRICS summit, Prime Minister Pham Minh Chinh and China’s Premier Li Qiang agreed to boost economic, trade and investment ties between the two countries during a meeting on the sidelines. They also agreed to prioritize the construction of a railway link connecting the two countries, one of many signs of closer cooperation between the two neighbours underscoring Vietnam’s need to keep Beijing on side.
White House Opens New Front In Attack On Fed Chief Jerome Powell
The White House has accused Jerome Powell of “grossly” mismanaging an “ostentatious” refurbishment of the Federal Reserve’s headquarters, opening a new front in its attack against the US central bank. Russell Vought, director of the Office of Management and Budget, said in a post on X that the Fed chair had “grossly mismanaged the Fed”. Vought, a Trump ally, accused Powell of presiding over a renovation of its headquarters that was US$700mn over budget. He claimed the US$2.5bn refurbishment of Washington’s Marriner Eccles Building cost almost as much as the Palace of Versailles in current dollars.
Vought’s criticism marks a fresh tactic in the Trump administration’s battle with the bank and its chair. The president has frequently attacked Powell over the central bank’s refusal to cut interest rates, calling him “a stubborn mule” and “a numbskull” but Vought’s comments mark the first direct attack from a close ally of Trump. Powell has described media reports regarding the excesses of the rebuild as “inaccurate”.
The Fed has left interest rates on hold at 4.25-4.5% since the turn of the year. The Fed says it cannot cut rates further until it has more evidence of how Trump’s trade war will affect US inflation.
The browbeating has alarmed investors, with the US dollar falling to a three-year low after The Wall Street Journal reported that Trump could announce a shadow chair as early as the summer. The White House has denied a decision is “imminent” but at the end of June, Trump said he had a shortlist of “three or four names” to replace Powell.
That has raised alarms about the independence of the Fed. Trump has made clear that his next pick for what he describes as “the best job in government” will be based less on knowhow, and more on kowtowing to the White House. “Whoever’s in there will lower rates,” the US president said in the Oval Office in late June. “If I think someone is going to keep rates where they are, I’m not going to put them in.”
But Fed insiders believe Trump is underestimating the challenges his nominee might face once they enter an institution with a long history of independence from government. “The memory of the 1970s is seared into the institutional framework of the Fed,” says Diane Swonk, chief economist at KPMG US. “Even the janitor there knows who the worst Fed chair in history was,” she adds, a reference to Arthur Burns, who cut rates following pressure from Richard Nixon ahead of the 1972 presidential election, only for inflation to soar and growth to collapse after the oil price shock the following year. Paul Volcker, now regarded as one of the most effective chairs, had to raise interest rates to double digits to tame inflation, enduring public opprobrium as unemployment topped 10%.
The White House insists the Fed is a barrier to its efforts to boost US growth. “It’s pretty universal having a president who wants lower rates,” says Don Kohn, a former Fed vice-chair who is now at the Brookings Institution think-tank. “What’s unprecedented is Trump doesn’t want lower rates to goose the economy, for him it’s about lowering the cost of the debt. That’s worrisome because keying monetary policy to relieving budget pressures is a sure track towards higher inflation.” Last week, Trump appeared to confirm this, posting on his Truth Social platform that the fed funds rate was “at least 3 points too high” and “costing the U $360bn a percentage point in refinancing costs.”
PBOC Adviser Urges $209bn Stimulus To Offset Tariffs
China should add as much as 1.5 trillion yuan (US$209bn) in fresh stimulus to boost consumer spending and maintain currency flexibility to counter the effects of US tariffs, academics including an adviser to the country’s central bank said. The Chinese economy has been facing “new disruptions” since April, when US levies jumped, in addition to persistent deflation, experts including Huang Yiping, a member of the monetary policy committee of the People’s Bank of China, wrote in a report. The authorities should consider an additional 1-1.5 trillion yuan package over 12 months to lift household consumption to mitigate damages to the economy from 20%-30% US tariffs, they wrote. That compares with 300 billion yuan that central authorities plan to borrow this year by selling ultra-long sovereign special bonds to subsidize consumer purchases in its flagship initiative to boost spending.
The authors suggest the central bank maintain “sufficient” flexibility in the yuan to absorb future external shocks and cut policy rates further to help bolster expectations of stronger nominal growth. The government needs to expand the personal income tax base and simplify value-added tax structures as part of reforms to ensure fiscal sustainability, according to the authors. “To address these evolving challenges, China must adopt a more forceful counter-cyclical approach to maintain stable growth, while advancing aggressively with structural reforms,” the authors said. They include Guo Kai, a former PBOC official, and Alfred Schipke, director of the East Asian Institute at the National University of Singapore.
State Council Issues Policies To Support Job Creation
The State Council announced new measures to support the labour market. Local governments will raise unemployment insurance refund rates, up to 90% for small businesses (from 60%) and 50% for large enterprises (from 30%). Additionally, firms facing financial strain will be allowed to defer payments to pension, unemployment, and work injury insurance funds in an effort to reduce pressure on employers and stabilize employment. The new policies also pledge support to firms that employ workers from “key employment groups.”
Subsidies from the youth hiring scheme will be paid out faster and more efficiently. The youth hiring subsidy, introduced in 2022, provides a one-time Rmb 1,500 subsidy for each newly recruited worker aged 16-24.
The policies have arrived just in time for the summer graduation season, which sees a record high 12.2 million graduates set to enter the labour market. The new measures are not expected to halt a surge in youth unemployment in the coming months.
Malaysia Industrial Output Growth Below Estimates
Industrial production in Malaysia rose 0.3% year-on-year in May, sharply slowing from a 2.7% increase in the previous month and missing economists’ expectations of 1.8%. It was the weakest growth since a decline in December 2023. Manufacturing output grew at a slower pace (2.8% vs 5.6% in April). On a seasonally adjusted monthly basis, industrial output fell 1.3%, much steeper than a 0.2% drop in April, marking the third fall so far this year. For the first five months of the year, production rose 2.0%, easing from a 3.4% increase in the same period in 2024.
FDI Into The Philippines Rises 7.1% In April
Net foreign direct investment (FDI) in the Philippines advanced by 7.1% year-on-year to a three-month high of US$0.6 billion in April. The increase in net inflows was driven by a significant rise in debt instruments (24.3%) and a modest gain in reinvestment earnings (3.3%). Meanwhile, equity capital saw a reversal, shrinking by 94.1%. For the first four months of the year, net FDI inflows reached US$2.4 billion, lower compared to the corresponding period of the previous year.
Week Ahead - July 14th to 20th
This week in the US, second quarter earnings season kicks off Tuesday and there is a slew of major economic data releases. Developments in US trade policy and their potential impact on global growth and financial markets will be considered. Donald Trump is expected to continue delivering letters to notify countries of new tariff rates.
Major US banks will dominate the earnings calendar with results due from JPMorgan, Bank of America, and Goldman Sachs, among others. Earnings are due from TSMC, J&J, ASML, Netflix, and 3M. Goldman Sachs predicts that, this quarter, US earnings will start to show the impact of the tariffs. The consensus estimate among analysts sees S&P 500 companies’ earnings-per-share growth decelerating to 4% this quarter relative to the same quarter last year, down from 12% in the first quarter.”
On the data front, major releases will be headlined by the US CPI, which is expected to accelerate, while retail sales are set to stagnate. The core consumer price index is seen accelerating on an annual basis for the first time since January, to 2.9%. There will also be the next reading of the University of Michigan’s Consumer Sentiment Index. The Fed’s Beige Book, published on Wednesday, will provide a clearer picture of economic fundamentals.
In Asia, a slew of data from China and Japan will be the focus. China releases trade figures today which will give the latest read of the impacts of US tariffs and potential frontloading of shipments. On Tuesday, China’s GDP growth is expected to have remained above the 5% target in Q2, coming in at 5.3%. On the same day, numbers for China’s June new home sales, retail sales and unemployment provide a snapshot of consumers. Industrial production figures are set to show the overall health of the economy. Investors also await loan data from the country.
In Japan, core machine orders and final May industrial production figures are out Monday and are expected to underscore a slowdown in activity. Thursday’s trade data is expected to also be weak. Inflation figures on Friday will highlight the challenge facing Japan’s central bank, with national consumer price data for June set to show the headline rate slipping to 3.3%.
Elsewhere in the Asia-Pacific region, inflation in India is seen cooling in data out today and India reports exports for June on Tuesday. Malaysia releases second quarter GDP figures and export data after a weak May. Singapore likely notched a 0.8% pace of growth in the second quarter. South Korea’s export and import trade price weakness may continue into June amid weaker demand. Indonesia’s central bank is expected to cut its key interest rate.
Globally, inflation data is due from the UK, while the spotlight in the Eurozone will be members' trade balances and industrial production.
On the geopolitical front, this year’s G20 meetings take place in South Africa. Finance ministers and central bank governors will meet in Durban from 14 to 18 July. However, US Treasury Secretary Scott Bessent will skip the meeting altogether, opting to head to Japan instead.
Rubio Says Xi-Trump Summit Likely
US Secretary of State Marco Rubio said a summit between US President Donald Trump and Chinese leader Xi Jinping is likely after the top diplomats from the two countries met in Malaysia. Rubio said he had a “very constructive and positive” sit-down with Chinese Foreign Minister Wang Yi on Friday, building on momentum in bilateral ties after Trump earlier last week described their recent relations as “really good.” The gathering was seen as a prelude to a possible leadership summit, which Trump said he’d like to happen this year. “There’s a strong desire on both sides to do it,” Rubio told reporters in Kuala Lumpur, where the envoys attended a gathering hosted by the Association of Southeast Asian Nations. “I think the odds are high,” he said, adding that the two countries will find a “mutually acceptable date.”
Beijing described the meeting as “pragmatic and constructive,” according to a statement from the Chinese foreign ministry. Wang hoped Washington would approach China “in an equal, respectful and mutually beneficial manner” and “find a correct way for China and the US to get along”, according to the statement. Both countries agreed to strengthen communication and dialogue at all levels, as well as to manage differences and expand cooperation, the ministry added. During the meeting, Wang emphasized the need to translate the consensus reached between the two heads of state into concrete policies and actions, adding that he hopes the US would view China with an “objective, rational, and pragmatic attitude,” according to the Chinese government statement.
Trump Plans ‘Major’ Russia Statement
Donald Trump told NBC News Friday he’ll be making a “major statement” on Russia today, as America prepares to send more weapons to Ukraine. Trump told NBC that he and NATO leaders had reached an agreement in which allies would pay for US arms that would be then sent to Ukraine. Earlier, Ukrainian President Volodymyr Zelenskiy said a meeting with allies in Rome stoked optimism that the US will ramp up military aid to the country, including air defence.
Trump, in the interview, reiterated criticism of Russian President Vladimir Putin over Russia’s continued attacks on Ukraine. He also said he expects the Senate to pass a tougher Russia sanctions bill sponsored by a close ally, Senator Lindsey Graham of South Carolina. “It’s at my option if I want to use it,” Trump said of the measure. “They’re going to pass a very major and very biting sanctions bill, but it’s up to the president as to whether or not he wants to exercise it.
Trump’s remarks come after US Secretary of State Marco Rubio met his Russian counterpart Sergei Lavrov Thursday on the sidelines of an Association of Southeast Asian Nations gathering in Kuala Lumpur. After a 50-minute conversation with Lavrov, Rubio said he would tell President Trump about “a new and different approach” to peace talks raised in the meeting. “We need to see a road map moving forward about how this conflict can conclude, and we shared some ideas about what that might look like,” Rubio said, while declining to provide details. In a written statement, the Russian Foreign Ministry said Rubio and Lavrov had a “substantive and frank” conversation that also touched on Iran and Syria. The meeting came as Russia pounded Kyiv and other Ukrainian cities with record numbers of drones and missiles last Thursday.
Indonesia Detains Trafigura Employee In $17bn Graft Case
Indonesia named six former executives of state energy giant Pertamina and three private-sector figures as suspects in a case involving oil procurement, widening one of the largest corruption investigations in the nation’s history. The attorney general’s office said late Thursday that it arrested eight suspects in the case, with one still at large and believed to be in neighboring Singapore. It accused the suspects of irregularities related to oil procurement between 2018 and 2023, and said the broader case had caused an estimated 285 trillion rupiah (US$17.6bn) in state and economic losses. The suspects include an employee of commodity trader Trafigura Group who was a business development manager during the period in question, as well as two individuals linked to other private companies.
India On Track For Record IPO Year
India is on track for a record year in initial public offerings after the value of primary listings reached their highest year-to-date level on the back of interest rate cuts and strong domestic demand for equities. The amount raised in primary public flotations this year has hit US$6.7bn, compared with US$5.4bn over the same period last year, making India the world’s biggest IPO market outside the US, according to Dealogic data. Several highly anticipated listings, including Tata Capital’s expected US$2bn flotation, could propel India past last year’s $21bn raised. “We are going to see a significant acceleration in the primary market compared to the first half,” said Sunil Khaitan, managing director and head of India financing at Goldman Sachs, who expects as much as US$20bn to be raised in the second half of the year.
Market optimism has been underpinned by the Reserve Bank of India’s reduction of interest rates by a full percentage point this year as inflation concerns ease and official data points to a recovery in the country’s economy. Retail investors, which have benefited from personal income tax cuts, have been pouring household savings into mutual funds. Foreign institutions have withdrawn US$8bn from Indian equities this year on concerns about high valuations, but the figure has been dwarfed by domestic fund inflows of more than US$42bn, according to Goldman Sachs calculations.
The country’s blue-chip Nifty 50 index has recovered from a weak start to the year, when India was dealing with signs of a slowing economy, turbulence from US President Donald Trump’s tariffs and a brief conflict with Pakistan. The index is now up about 7% this year and nearing a record high.
Commodity Traders Poised For $300mn Windfall From US Copper
Trafigura, Mercuria, Glencore and IXM could reap bumper profits of more than US$300mn after shipping record amounts of copper into the US ahead of tariffs on the metal, according to a Financial Times report. The commodity traders are at the forefront of a trend in which huge quantities of copper are being brought to the US, where a widening price gap with the international benchmark has created a lucrative arbitrage opportunity.
US copper prices surged 13% within minutes of President Donald Trump’s announcement on Tuesday that the US would levy 50% tariffs on copper, twice the expected level, from August 1. They are now about 28% higher than on the London Metal Exchange, making the traders’ gamble, in essence buying at the LME price, shipping to the US and selling at the US Comex price, one of the most profitable metals trades in recent decades. While analysts question the impact copper tariffs will have on US manufacturers, commodity trading firms have emerged as the clear corporate winners.
Asian Markets Follow US Stock Futures Lower
Stock markets in the Asia-Pacific region Friday largely followed US stock index futures lower after Trump said he’s eyeing blanket tariffs of 15% to 20% on most trading partners. “I think the tariffs have been very well-received. The [US] stock market hit a new high today,” the US president told NBC News.
Japan’s Nikkei 225 slipped 0.2% to close at 39,570. For the week, Japan’s benchmark index fell 0.6%. South Korea’s Kospi was 0.2% lower Friday but up 4.0% on the week. Australia’s S&P/ASX 200 slid 0.1%, taking its weekly decline to 0.3%. In India, the BSE Sensex closed 0.8% lower at 82,552. Last week it was down 1.1%.
Singapore’s benchmark Straits Times Index climbed to a fresh high Friday, notching its fifth consecutive day of gains. The country’s equities index climbed 0.3% to hit a fresh record of 4,087.81 points.
Goldman Sachs strategists raised their forecast Friday for Asia ex-Japan equities, citing a more favourable macro environment. Strategists led by Timothy Moe said tariff imposition and easing monetary policy are likely to be important macro influences on Asian equity markets in the third quarter. The 12-month target on the MSCI Asia Pacific ex-Japan Index was lifted by 3% to 700, implying a 9% return in dollar terms during the period. Even if the tariff rates imposed are somewhat above current baseline expectations, “the fundamental growth impact may not be as negative as markets feared in early second quarter,” they said.
The Philippines and Taiwan are regarded as the regional markets “most positively sensitive” to dollar weakness resulting from the Federal Reserve’s easing cycle, they added. The strategists maintained their overweight stance on Japan and South Korea while downgrading Malaysian stocks to underweight amid a preference for North Asian markets.
Chinese Stocks Outperform
Chinese shares bucked the downward trend seen across the rest of Asia. Mainland China’s CSI 300 rose 0.1% to 4,015. For the week, it was up 0.8%. The index has barely moved in 2025, gaining just 2.0%. In Hong Kong, the Hang Seng added 111 points, or 0.5%, ending the session at 24,140. It was up 0.9% over the five trading days taking its 2025 gains to 20.3%, making it one of the best performing major markets in the world. The Hang Seng Tech Index rose 0.6% Friday.
Wuxi AppTec jumped 10.5% in Hong Kong after reporting its first-half profit likely more than doubled from a year earlier. Affiliate Wuxi Biologics surged 3.7%.
The Goldman Sachs strategy team on Friday upgraded Hong Kong stocks to market-weight, saying they will be among the key beneficiaries of US dollar weakness. Goldman Sachs had downgraded Hong Kong stocks to underweight in November, due to weak property and retail sectors, as well as less policy flow-through from China’s domestic easing. The Hang Seng Index and the MSCI Hong Kong Index have each risen at least 18% since then. The strategists maintained their overweight stance on mainland China.
European Stocks Fall Sharply
The Stoxx Europe 600 fell Friday after NBC News reported Trump had indicated the European Union would receive details of its new tariff rate shortly. However, none came during market hours.
The Stoxx Europe 600 index was down 1.0%. Germany’s DAX and France’s CAC 40 were both lower by around 0.9%. The UK’s FTSE 100 fell 0.4%. For the week the pan-European Stoxx gained 1.1%. Gains last week came despite a slew of tariff announcements that might previously have shaken markets, including 25% duties on trading partners including Japan and South Korea, a 50% rate on Brazil, and a higher-than-expected 50% rate on all copper imports along with a threatened 200% tariff on pharmaceuticals.
The UK economy shrank for a second straight month as companies and consumers struggled to bounce back from the blow of US tariffs and tax increases. The UK economy unexpectedly contracted 0.1% in May. Friday’s figure from the Office for National Statistics followed a contraction of 0.3% in April and was well below the 0.1% growth forecast by economists polled by Reuters. May’s fall in GDP, driven by declines in the oil and gas sector, manufacturing, construction and retail, contrasted with rapid growth of 0.7% in the first three months of the year, when a surge in exports and a robust services sector performance placed the UK among the G7’s top performers. The two-month dip in output comes after increases in taxes on business by chancellor Rachel Reeves, who still faces a fiscal hole some economists estimate at more than £20bn (US$27.1bn), and amid uncertainty about the global economic impact of US President Donald Trump’s tariff plans.
US Stocks React Calmly To Tariff Announcements
On Wall Street, investors reacted calmly last week to Donald Trump’s latest trade pronouncements. Some worry that will only embolden him to keep ratcheting up tariffs, raising the risk of overreach that ultimately sends stock and bond prices sinking. Trump wrote Friday on Truth Social, “Tech Stocks, Industrial Stocks, & NASDAQ, HIT ALL-TIME, RECORD HIGHS!” USA is taking in Hundreds of Billions of Dollars in Tariffs. COUNTRY IS NOW “BACK.” A GREAT CREDIT!” This week’s focus is set to shift to second quarter earnings, starting with the US big banks, providing a key insight into how companies are grappling with global uncertainty.
On Friday, the S&P 500 slid 0.3% to end at 6,260. The Nasdaq Composite ended the day 0.2% lower at 20,586. The two indices hit new records on Thursday. The Dow lost 279 points, or 0.6%, to close at 44,372. Friday’s losses pushed the major averages into the red for the week. The Dow Industrials ended the week with a 1.0% decline, while the S&P fell 0.3% and the Nasdaq notched losses of 0.1%.
The VIX index of US equity volatility dropped last week to the lowest since February, while an equivalent measure of fluctuations in the Treasury market fell to the lowest since 2022. Investors are pricing in the so-called Taco trade, which describes the pattern of back-pedalling on tariff threats based on the premise that “Trump always chickens out”. The S&P 500 and Nasdaq set another record high, as did Bitcoin. “Record highs and a low VIX signals markets have already priced in perfection, a soft landing and a clean unwind of tariff risks, which feels wildly out of sync with the real-world picture,” said Hebe Chen at Vantage Markets in Sydney. “A pullback is very much on the table, with the S&P 500 glued to overbought territory.”
The latest round of tariff threats from President Trump could spark fresh concerns about inflation, which might force the Federal Reserve to maintain its wait-and-see posture on interest-rate cuts, Chicago Fed President Austan Goolsbee said in an interview Friday. JPMorgan Chase CEO Jamie Dimon believes there remains a greater risk that interest rates will instead need to be hiked again than most people believe. “The market is pricing a 20% chance of a rate hike, I would price in a 40-50% chance. I would put that as a cause for concern,” Dimon said.
Levi Strauss shares jumped 11.3% after the jeans maker raised its revenue forecast, expecting sales growth to outweigh the effect of President Donald Trump’s tariffs. Analysts say the higher guidance might still be conservative.
Kraft Heinz is planning to spin off a large chunk of its grocery business, including many Kraft products, into a new entity, the Wall Street Journal reported. That would leave a company with sauces and spreads like Heinz ketchup and Grey Poupon mustard. Kraft Heinz shares rose 2.5%.
Drone-related companies rallied after Fox News reported that Defense Secretary Pete Hegseth issued orders to ramp production and deployment of drones. Among stocks advancing were Red Cat (+26.4%), AeroVironment (+11.0%), and Kratos Defense & Security Solutions (+11.8%).
Treasury Yields Rise As Trump Slaps 35% Tariffs On Canada
US Treasury yields moved higher on Friday as investors digested a week of trade drama. NBC reported Trump plans to impose blanket levies of 15% to 20% on most trading partners that haven't yet received a tariff notification. The 10-year Treasury yield was up 7 bps to 4.42%, and the 30-year yield was up 9 bps at 4.96%. The 2-year yield was higher by 2 bps, reaching 3.89%.
US Dollar Rebounds
The US Dollar Index rose 0.3% Friday to 97.87. For the week, it rose 0.9% but the measure of the dollar against a basket of six other currencies is still down almost 10% year-to-date.
The Canadian dollar weakened against the greenback Friday and for the week. It finished the day down 0.2% versus the US dollar and down 0.6% for the week. The latest decline followed news that the US would put a 35% tariff on Canadian imports, effective August 1. The Australian dollar increased to 0.66, the highest since November 2024. The Aussie had been supported by the Reserve Bank of Australia’s surprise decision to hold rates at 3.85%. The Japanese yen fell 0.8% to ¥147.4. Over the week, the yen tumbled 2.0%.
The offshore Chinese yuan was slightly firmer around Rmb 7.17 per dollar supported by a strong fixing from the People’s Bank of China. The central bank set the daily midpoint at 7.1475, higher than the expected 7.1771. Despite Friday’s gains, the currency snapped a three-week winning streak. Earlier in the week, data showed that annual consumer prices rebounded in June, though they remained subdued at 0.1%. At the same time, producer prices posted the 33rd consecutive month of deflation, marking the steepest drop since July 2023.
HKMA Intervenes For The 5th Time In 2 weeks To Defend Currency
The Hong Kong Monetary Authority (HKMA) stepped into the foreign-exchange market on Friday for the fifth time in two weeks, buying the local currency and increasing overnight lending costs. The HKMA sold US$1.69 billion during New York trading hours on Thursday and bought the equivalent of HK$13.28 billion at HK$7.85 per US dollar, the authority said in a statement on Friday morning. The moves would reduce the aggregate balance, a measure of the banking sector’s liquidity, by the same amount to HK$101.22 billion on Monday when the transactions would be settled, it added. The local currency traded at HK$7.8497 after the intervention.
“There is a wide gap between the US and Hong Kong dollar interest rates, which encourages traders to conduct carry trades to earn big profits from the rate differentials,” said Tom Chan Pak-lam, chairman of the Hong Kong Institute of Securities Dealers. The overnight interbank rate in Hong Kong stood at 0.0893% on Friday, compared with 4.3324% in the US, a gap of more than 4 percentage points. The differential encourages investors to borrow money in Hong Kong dollars to invest in assets denominated in a higher-yielding currency.
The one-month Hong Kong interbank offered rate (Hibor), which is used to price mortgage loans, rose to 1.0819% on Friday from a three-year low of 0.5284% on June 20, according to the Hong Kong Association of Banks. Three-month Hibor, used to price corporate loans, rose to 1.8485% from 1.5295% over the same period.
Gold Rises For Third Day
Gold rose for a third day as investors sought haven assets. Spot gold climbed 0.9% to $3,356 per ounce, taking its year-to-date gain to almost 28%. Gold has rallied, aided by heightened geopolitical tensions and central bank buying, as investors seek safety in the metal amid worries about the long-term impact of tariffs on the global economy.
Copper Hovers Close To Record High
Copper futures in the US were at $5.58 per pound on Friday, inching down from the record of $5.70 touched on Tuesday but still hovering over 11% higher than Monday's close as markets assessed how 50% tariffs on the metal would impact its supply. The tariff will be enforced August 1st, even though new capacity takes years to be developed. This drove the premium between US copper and comparable futures at the LME, which is the global benchmark, to a record 25%. Traders have moved copper into the US since tariff threats on base metals started in February. If implemented, the tariff would threaten the domestic supply as the US imports nearly half of its consumption, with Chile as its primary supplier. Refining and smelting capacity would likely be stressed, with only two operating smelters in the country.
IEA Sees Lowest Oil Demand Growth Since 2009 Outside Of Pandemic
Brent crude oil futures settled 2.2% higher at $70.36 per barrel. For the week, oil rose 3.0%.
The International Energy Agency (IEA) said it expects global oil demand to grow at the slowest pace since 2009, outside of the coronavirus pandemic, amid early signs that US tariffs are weighing on economic activity. The energy advisory body said it expected consumption to increase by only 700,000 barrels a day this year. That would be the smallest rise in annual demand since the aftermath of the global financial crisis, with the exception of 2020 when demand contracted by 8.7mn b/d as governments shut key parts of the economy in order to contain the spread of Covid-19. In its monthly oil market report, the IEA said it had trimmed its forecast from a previous growth estimate of 720,000 b/d, after lower than expected demand in the second quarter of the year, particularly in emerging markets.
The IEA also noted that Saudi Arabia, which has repeatedly scolded other members for over-production, raised its crude output far above its OPEC+ quota last month. The kingdom boosted production by roughly 700,000 barrels a day to 9.8 million barrels a day. Other producers that topped their quotas last month as Israel went to war with Iran were Iraq, Kuwait and the United Arab Emirates, the IEA said in its monthly report
Bitcoin Extends Record Run
Bitcoin continued its run on Friday to new all-time highs, climbing as much as 4.5% to a record of $118,861, according to CoinDesk data, notching a new intraday high for a third straight day. The biggest digital asset by market value is up around 26% this year. The rally triggered a major unwinding of short positions, with over a billion dollars’ worth of bets against the token getting liquidated over the 24 hours to Friday, according to data compiled by Coinglass. Investors rushed into Bitcoin ETFs, pouring in a net US$1.2 billion on Thursday. Ether, the second-largest cryptocurrency, jumped as much as 6.4% to $2,999, driven by strong inflows into its US spot ETFs.
Mauricio Di Bartolomeo, co-founder and CSO of Ledn, said, "Bitcoin has reached a new all-time high on the back of relentless demand from investors and corporations". Roshan Roberts, CEO of trading platform OKX US, said, “Bitcoin is showing why it’s in a class of its own. As trade tensions flare and altcoins stumble, institutions are treating BTC as a macro hedge and a maturing asset class. July will test markets, but Bitcoin looks built for it.”
Trading in the options markets suggest the rally could continue. Open interest is concentrated around Bitcoin call options with $115,000 and $120,000 strike prices. Longer-term options expiring in late September and December have seen elevated open interest at $140,000 and $150,000.
Peter Lewis’ Money Talk Podcast
On Monday’s “Peter Lewis’ Money Talk” podcast, I’ll be joined by Alex Wong, director at Alex KY Wong Asset Management, and John Schofield, Managing Director of Tempus Investment. Providing a view from Mainland China is Brock Silvers, CIO at Kaiyuan Capital.
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