Iran de-escalation sees big drop in Oil and short-Bond yields

Asia Market Update: Iran de-escalation sees big drop in Oil & short-Bond yields; Market not impressed by more circular AI financing; CMXT CN IPO goes gangbusters; JP cabinet reshuffle; FOMC, BOE, BOJ this week + MSFT, META, AAPL & AMZN.

General trend and developments

- US WTI crude oil fell -6% at the Monday open following Pres Trump’s decision late Friday to pause bombing of Iran after 13 consecutive nights of airstrikes, reportedly influenced by US CENTCOM Chief's recommendation due to “bombing targets being mostly exhausted”. Oman also pursuing a Hormuz transit deal on Sunday. Risk assets Spot Silver +3% back to $60/oz, Gold +1.3% to >$4,100/oz, Bitcoin back to ~$65K while the Nasdaq rose +1.4% soon after reopening. That was the peak however, with prices consolidating below their below levels at time of writing.

-However, reports of Yemen’s Houthis launching unconfirmed strikes against Saudi Aramco facilities in the Red Sea’s Jizan and Yanbu and more crucially yet to see many vessels muster the courage to try and transit the Strait of Hormuz.

- Recall, there was, also, de-escalation talk on Fri; China was said to have encouraged Pakistan and Iran to explore a path to reopen the talks with the US; Oman was said to have dispatched a delegation to Tehran to discuss a framework for managing ship traffic through the Strait of Hormuz; Meanwhile, Yemen’s Houthis were said to have ‘signaled’ they are not seeking a broad closure of the Bab el-Mandeb Strait.

-Markets looking past numbers in yet more “trillion-dollar AI deals”, with further circular financing tie-ups announced between US tech giants Nvidia, Broadcom and Korean conglomerates Samsung, SK Group (SK Hynix & SK Telecom) and Naver. Nvidia also said to be in $250B data center financing backstop deal with OpenAI. Korean investors unimpressed with the shiny deals, Kospi -0.9% to underperform in Asia; SK Hynix and Samsung shares actually fell slightly, while Naver lost most of its early 22% gains to be +8% up at time of writing.

-ChangXin Memory Technologies (CXMT) debuted in Shanghai at CNY49.50/ share, a mammoth 472% increase on its IPO price of CNY8.66/shr. With 6.69B new IPO shares taking the outstanding share total to 66.9B shares, the CNY49.50/shr price gives an implied market cap of ~CNY 3.31T (~$485B) - making it mainland China’s most valuable company and the second-biggest CN/HK company, not far behind Tencent’s leading market cap of ~CNY 3.65T (~$505B)

-Stakeholders in CXMT include Alibaba, Tencent, Midea, Xiaomi, TCL and GigaDevice, according to the Chinese press.

-Japan PM Takaichi will give a press conference at 9am GTM, reportedly on the still undecided food tax plans, while also said to be planning a cabinet and LDP executive reshuffle for August-September following a sharp drop in public approval (41-53% vs prior mid-70s) and the passage of a controversial secondary Capital bill (such as Osaka in the case of Tokyo hit by natural disaster), a plan that had been pushed primarily by LDP’s coalition partner the Japan Innovation Party.

-Not such good news today for Chinese AI model-maker DeepSeek as it confirmed the suspension of its second fundraising, partly due founder Liang Wenfeng's frustration over online reports about his comments to investors during his first financing deal regarding a reliance on Nvidia chips for AI development.

-Ahead of the BOJ rate decision this week, further Japanese press reports late Friday that BOJ members agree on future rate hikes but prefer a cautious approach, without rushing (inline). OIS market odds now show an 89% chance of a rate hike by October and a sharply increased chance of 40% as soon as September. 5-year JGB yields on Friday reached a record-high since 2000 debut at 2.05% with markets continuing to fret about long-term debt levels and rising inflation while doubting the capacity of the government's new “Honebuto” (big-boned) economic plan to double Japan's real growth rate by 2040. Japanese yield curves did come off last week's highs today, on the back of the fall in crude oil today.
-Confirming the per-nation 10-12.5% forced-labor tariffs imposed by the USTR late last week on ~60 economies are as follows:

1) 10% tariff rate applies to 17 economies: Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the UK.

2) The previously ambiguous “10-12.5%” tariff rate is confirmed as 10% Net-of-MFN Cap for the European Union and Taiwan, each being given a special provision capping the total rate at 10% (as before); While Japan, South Korea, and Switzerland have been placed in a separate "12.5% net-of-MFN" category, so Japan and South Korea's 15% effective tariff rate net out to remain at 15% applied to each, while Switzerland is now rated up to 12.5%, more than the EU's 10%).

3) The “standard” 12.5% tariff rate applies to all other investigated 38 countries “because they failed to adopt or enforce a forced labor import prohibitions”. Notable trading partners include China, Hong Kong, Australia, South Africa, Brazil, New Zealand, Singapore, Vietnam and the Philippines, Thailand

-In other trade news and as USMCA trade talks continue between the US and Mexico, the US reportedly presses Mexico to increase its tariffs on China steel and aluminum to match the US Section 232 duties. Part of a unified approach to protect pan-North American production, which Mexico said to be open to.

- Singapore Central Bank (MAS) tightened its quarterly policy settings, but less than its initial tightening back in April (first tightening in nearly 4 years at the time), as the bank prepares for inflationary pressures on fresh tensions in the Middle East keeping energy prices elevated.

-Indonesia Central Bank Governor Warjiyo suddenly stepped down, due to ‘personal reasons’, still two years away from completing his second five-year terms. Rupiah fell back to test 18,000/USD again.

-Waiting for announcements out of China’s keenly anticipated Poliburo meeting, set to announce economic policy for the second half of the year and in particular investors will be looking for any further support for China’s AI industry following on from Pres Xi’s full-throated endorsement 10 days ago at Beijing’s WAIC of China’s global export of open-source AI.

-Netanyahu arrives in Washington DC amid reports of US and Israel being increasingly divided over their objectives in the Iran conflict; Netanyahu pushing for greater damage to the Iranian regime while Pres Trump seeking an exit strategy ahead of November’s midterm elections.

-SpaceX successfully launched Starship Flight 13 on Friday. It achieved a successful suborbital flight, deployed 20 next-generation Starlink V3 satellites and executed the softest-ever intact splashdown (i.e. no big explosion) of the upper stage Starship.

-Market moving potential later in the week with Fed, BOE and BOJ rate decisions on consecutive days (Wed, Thurs, Fri), as well as US Core PCE and US Q2 Prelim GDP on Thursday. US Big tech earnings this week include Microsoft, Meta, Apple and Amazon.

-US equity FUTs +0.8% to +1.4% during Asia trading

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

-Mon July 27th: HK Jun Trade Balance.

-Tue July 28th: KR Jul Consumer Confidence, (Tue night, US Jul Consumer Confidence).

-Wed July 29th: AU Jun + Q2 CPI, (Wed night, US Fed Rate Decision).

-Thu July 30th: NZ July ANZ Business Confidence, EU Prelim Q2 GDP, (Thu night, UK BoE Rate Decision, US Jun Core PCE, Prelim Q2 GDP).

-Fri July 31st: KR Jun Industrial Production & Retail Sales, JP July Tokyo Core & CPI, JP Jun Retail Sales & Prelim Industrial Production & Unemployment Rate, AU Q2 PPI, CN July PMIs, JP BoJ Rate Decision, TW Prelim Q2 GDP, HK Prelim Q2 GDP, EU Prelim Jul CPI -Sat Aug 1st: OPEC Meeting.

Holidays in Asia this week

-Tue July 28th: Thailand.

-Wed July 29th: Thailand.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens +1.0% at 8,861.

-(AU) Australia PM Albanese to ‘press’ Trump on the new tariffs; Australia is also expected to announce fuel-related measures in the coming weeks – US financial press.

-(AU) Major brands sell China tomatoes as ‘Australian-grown’; the article specifically mentions Leggo's, Coles and Aldi – Australian press.

China/Hong Kong

-(CN) Shanghai Composite opens -0.1% at 3,808; (HK) Hang Seng opens +0.1% at 24,993.

-(CN) China PBOC 1-year Medium-Term Lending facility (MLF) setting: Leaves rate unchanged at 2.00%; Conducts CNY500B v CNY500B indicated (update) [weekend update].

-(CN) CXMT.IPO *Debuts on the Shanghai Stock Exchange's STAR Market; priced at CNY49.50/share (v CNY8.66/share).

-(CN) China's President Xi holds phone talks with Brazil's President Lula.

-(CN) China Jun Industrial Profits Y/Y: 15.1% v 21.1% prior [weakest growth rate of 2026].

-(CN) Recent CSRC [China securities regulator] meetings will boost A-share market confidence [inline]; affirms China also has ample policy tools and regulatory capabilities to support the equity market – State-backed China Securities Times.

-(CN) Inside the all-out push in China to catch up with US AI chips - WSJ [update].

-(CN) Fitch: China money market funds (MMFs) grow despite record low yields – US financial press.

-(CN) China cracks down on offshore trusts with new tax rules for the wealthy - SCMP [update].

-(CN) Investors use cryptocurrency exchanges to gain exposure to China AI stocks - FT [update].

-(CN) China Daily Op-Ed: AI development should be not ‘zero-sum’.

-(CN) CXMT Stakeholders in CXMT include Alibaba, Tencent, Midea, Xiaomi, TCL and GigaDevice – China Daily [update from Jul 18th].

-(CN) DEEPSEEK.IPO Confirms suspension of second fundraising - US financial press.

-(CN) China PBOC sets the yuan mid-point at 6.7911 v 6.7939 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY326B in 7-day Reverse Repos; Net drains CNY73B v drains CNY362B prior.

-(HK) Hong Kong Observatory posts 'red' rain warning amid Typhoon Noul.

-(HK) Hong Kong Exchange to introduce Zhongji Innolight stock options.

Japan

-(JP) Nikkei 225 opens +0.9% at 65,158.

-(JP) Japan PM Takaichi; Cutting debt-to-GDP ratio is key to fiscal management; affirms raising economic competitiveness will increase 'trust' in the Yen.

-(JP) Japan Jun PPI Services Y/Y: 3.2% v 3.4%e.

-(JP) Japan Takaichi cabinet approval rating falls to 57% - Yomiuri.

-(JP) Bets on early BOJ rate hike increase amid Yen weakness [inline with recent OIS] – Nikkei [update].

-(JP) Japan Trade Min Akazawa: Very concerned about renewed tensions in Mideast.

-(JP) Follow up: Japan PM Takaichi to hold press briefing at 6pm local time, JST (9am GMT) [amid speculation related to cabinet reshuffling].

-(JP) 9984.JP Softbank's $40B loan for OpenAI stake gets 21 new lenders - US financial press.

Korea

-(KR) Kospi opens +1.7% at 6,806.

-(KR) 000660.KR *SK Hynix with Samsung enters into total $950B long-term AI memory supply chain partnership with Nvidia [weekend update].

-(KR) NVDA Announces $500B-plus AI infrastructure and memory partnership with SK Group; 2-GW AI factory planned in Korea for 2027 [weekend update].

-(KR) 035420.KR Expands Korea sovereign AI factory to 200MW with Brookfield and NVIDIA; $10B project, including $1B investment from Nvidia [weekend update].

-(KR) 005930.KR Samsung Electronics and Broadcom Expand Strategic Collaboration Across Memory and Foundry Technologies [weekend update].

-SKHY Chairman Chey Tae Won says Anthropic has asked SK Hynix for supplies to make its own semiconductors - press [weekend update].

-(KR) Korea's customs agency uncovers KRW7.2T worth of illegal FX trading in H1 - Yonhap.

-(KR) South Korea President Lee approval rating declines for the 2nd straight week; specifically the rating declined to 46.3% v 48.4% w/w – Yonhap poll.

-(KR) South Korea Foreign Ministry: South Korea closely monitoring Russia's reported preparation for more North Korean troops.

Other Asia

-(SG) Singapore Central Bank (MAS) July 2026 Monetary Policy Statement: No change to width and level at which it is centered, but will increase slightly the rate of appreciation of S$NEER policy band.

-(ID) Indonesia Central Bank (BI): Governor Perry Warjiyo to step down early, names Destry Damayanti as interim Gov - announcement on Institutional Policy.

-(IN) India youth protesters agree to end demonstrations in good faith after talks with the govt [weekend update].

-(IN) Follow Up: India said trade talks with the US helped it secure a lower tier additional tariff – US financial press.

-(ID) Indonesia Central Bank (BI) to announce Institutional Policy at 07:30am local time (00:30am GMT).

-(MY) Malaysia Econ Min Akmal: Development spending touched MYR1.214B, or 57.4% of 2026 MYR2.115B allocation - addressing officials at the Ministry's Monthly Gathering.

-(TH) Thailand Jun ISIC Manufacturing Production Index Y/Y: -3.1% v +0.4%e.

North America

-(US) Federal appeals court blocks implementation of Trump Admin Executive Order restricting mail in voting [weekend update].

-(US) SPCX Successfully launched Starship Flight 13 mission into space and returned the rocket to earth during today's test flight [weekend update].

-(US) NVDA In discussions with OpenAI to discuss $250B data center financing [backstop]; the article comments on 'circular funding' - WSJ.

-(MX) Follow up: US reportedly presses Mexico to increase its tariffs on China steel and aluminum to match the US Section 232 duties; Comes amid USMCA talks [weekend update].

-(US) TTN Research Alert; Confirmation of tariff rates for ~60 countries under the new USTR Section 301 tariffs related to forced labor (replacing the retiring Section 122 tariffs) [weekend update].

-(US) Dept of Energy (DOE): Issued order to keep 17 states powered during hot weather - update.

-(US) Fed faces rising pressure to raise rates [inline] – US financial press [update].

-(US) Large companies are starting to increase hiring despite the impact of AI – WSJ.

-(DRC) Democratic Republic of Congo: Number of confirmed Ebola cases rises to 3,200 (v 2,536 prior), including 1,405 (v 1,033 prior) deaths - (update).

Europe

-(RU) Ukraine Pres Zelenskiy says Ukraine military was able to strike Tyumen oil refinery (180K bpd capacity), deep in central Russia for the first time (about 2.00km from Ukraine border); Also hit vessels in the Caspian Sea shipping military cargo involving Iran [weekend update].

-(RU) Kazakhstan President has urged Putin to freeze the Ukraine war – FT [update].

-(EU) ECB adopts guideline for it's Euro offers to non-Euro Central Banks - US financial press.

-(EU) ECB’s Zigman (Croatia) said the fallout from the Iran war takes time to impact inflation – US financial press [update].

-(UK) City Economists have warned higher oil prices could force up UK interest rates – Guardian.

-(UK) According to the UK AI Min Narayan, chips and drones are at the heart of PM Burhnam’s reindustrialization push – FT.

-(UK) UK to use signal jammers to protect Ukraine attack drones - Press.

-(UK) According to EY Item Club, the Iran war will slow the UK economy for 2 years; estimates 2026 UK GDP growth at 0.9% v 1.3% in 2025 – London Times.

-(FR) France President Macron calls crisis meeting for Monday as wildfires threaten Bordeaux – Press [update].

Middle East

-(IR) Follow up: US Pres Trump's late Friday decision to pause bombing of Iran after 13 consecutive nights of airstrikes said to be influenced by US CENTCOM Chief's recommendation - Axios, citing sources [weekend update].

-(SA) Yemen Houthis claim to have launched strikes against Saudi Aramco facilities in Jizan and Yanbu; Saudi govt has not confirmed - press [weekend update].

-(IR) Iran Oil Minister: Have realized more than 60% of annual oil revenue forecast in the budget despite the war and sanctions [weekend update].

-(IL) Israel May Manufacturing Production M/M: -6.2% v +29.9% prior (update) [weekend update].

Levels as of 01:20 ET

Nikkei 225 +0.3%; ASX 200 +1.4%; Hang Seng +0.8%; Shanghai Composite +0.3%; Kospi +0.8%.

Equity S&P500 Futures +0.8%; Nasdaq100 +1.4%; DAX +1.0%; FTSE100 +0.2%.

EUR 1.1414-1.1384; JPY163.74-163.46; AUD 0.7007-0.6990; NZD 0.5811-0.5788.

Gold +0.9% at $4,090/oz; BTC +1.6% at $65,471; WTI Crude Oil -5.2% at $84.72/bbl; Copper -0.2% at $6.3498/lbs.