Markets hold cautiously despite Iran's hardline talk

Asia market update: Markets hold cautiously despite Iran hardline talk; RBA rates tomorrow; CN soft CPI; BOJ hawkish comments.

General trend and developments

- US equity FUTs opened and stayed largely flat even as Crude jumped +2% on further “hardline“ Iranian statements (see below). Asian stocks brushed it off with the Nikkei outperforming +2%, Kospi also positive as well as Hong Kong and mainland China, with just Australia’s ASX lagging with Financials -2% as heavyweight Westpac bank fell -4.3% on a sharp 20% drop in mortgage loan applications (follows the Australia federal budget and this year’s RBA interest rate hikes).

-Australia RBA rate decision tomorrow sees 100% market expectations of a further hold, with interest around the tone of the statement and guidance.

-On Saturday Iran's Supreme National Security Council abruptly froze any progress toward a truce by issuing six strong demands to the US. The domestic pivot heavily undercut Pres Pezeshkian’s diplomatic framing the day before. Iran's demands include several items unacceptable to the US side, including: Total Force Withdrawal, a permanent End to US operations, an End to Proxy Warfare, Financial Reparations and Sanctions & Asset Relief and Lifting the Blockade.

-Pres Trump in response said he was keeping a "low key" approach to Iran -for now signaling the US will keep its squeeze on Iranian coffers via financial sanctions and the Strait of Hormuz blockade.

-China's July inflation data (+0.5%) saw yet again lower-than-expected figures, pointing to persistently weak domestic demand. China's economy continues to rely on a continuance of export-driven industrial activity. Even the relative slowing of factory-gate PPI (only +3.5%) despite the Iran conflict-induced price increases shows a lack of industrial pricing power.

-China PBOC has started August in another “stingy” mood, having net drained Yuan in each key 7-day Open Market Operations since the month began.

-The BOJ Summary of Opinions saw relatively hawkish sentiment as per Gov Ueda’s comments after the BOJ July 31st “Hawkish hold”. Comments included “Vital to stop underlying CPI deviating above 2%; Must ensure nimbleness of policy decisions and be open to rate hike sizes; Cost of delaying rate hike cannot be said to be small”

- Notably, concerning the Japanese carry trade, Japanese flows data from its current accounts for June showed that Japan sold the second-largest sum of Australia sovereign bonds during the month (the same month the BOJ hiked to 1.00%). The selling of Australian bonds signals a structural shift in global finance with the end of Japan as the primary source of cheap, outsourced capital for foreign bond markets, as domestic investors begin to repatriate their capital back to Japan.

- OpenAI’s decision over the weekend to pause the planned release of its powerful science-reasoning model, Astra, is the first time an AI developer has voluntarily frozen deployment due to a model reaching “critical” cybersecurity threat levels. The model could allow it to autonomously discover zero-day vulnerabilities and execute end-to-end cyberattacks against even hardened real-world targets - without human intervention. The industry fall-out likely to be wide, particularly as Chinese models continue to rush-ship their latest developments to the world at large, with minimal safeguards in place.

- US Fed’s Barkin, speaking after the unexpectedly weak US Nonfarm Payrolls for July (-23k when +80K was expected), maintained his prior neutral-to-hawkish stance. Barkin dismissed the weak July nonfarm payrolls as part of an existing "low hire, low fire" trend and that strong corporate earnings continue to prevent mass layoffs. Barkin reiterated that persistent inflation and cost pressures remain a primary concern and that the Fed will tighten policy further if economic headwinds persist. US Fed’s Bowman the following day echoed a similarly neutral-to-hawkish tone by prioritizing the central bank's fight against inflation.

- Pres Trump is moving ahead with attempts to fire US Fed’s Lisa Cook, serving her with an official notice that provides a 21-day window to contest the allegations against her. Cook has until Aug 26th to respond. Her legal team has vowed to challenge this latest move. Since the US Supreme Court ruled that Federal Reserve governors can only be fired "for cause", lower courts will have to decide the merits of the case.

- Apple is currently testing memory chips from China's CXMT and navigating local hardware integration amidst broader regional supply chain shifts. Meanwhile, as Alibaba's Qwen AI model remains slated for integration with Apple Intelligence in China, promotional material regarding the feature has been temporarily removed from Apple's website.

- US equity FUTs +0.1% to +0.3% during Asia trading.

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

-Tue Aug 11th: SG Q2 GDP, AU July NAB Business Confidence, RBA Rate Decision, (Tue night, US July Existing Home Sales).

-Wed Aug 12th: KR July Unemployment Rate, SG Q2 GDP, IEA Monthly Report, (Wed night, OPEC Monthly Report, IN July CPI, US July CPI & Core CPI).

-Thu Aug 13th: JP July PPI, UK Q2 Prelim GDP & Jun Industrial Production & Jun Trade Balance, JP July Machine Tool Orders, CN July New Yuan Loans & Agg Finance & Money Supply, EU Jun Industrial Production, (Thu night, US July PPI & Core PPI).

-Fri Aug 14th: NZ July Business PMI, MY Q2 GDP, TW Q2 GDP, HK Q2 GDP, EU Prelim Q2 GDP & Jun Trade Balance, (Fri night, US July Retail Sales & Core Retail Sales, US Prelim Q3 Atlanta Fed GDPNow).

-Sat Aug 15th: KR July Trade Balance.

Holidays in Asia this week

-Mon Aug 10th: Singapore.

-Tue Aug 11th: Japan.

-Wed Aug 12th: Thailand.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.1% at 9,249.

-(AU) Japan sold the second-largest sum of Australia sovereign bonds in June, 2026 - US financial press; cites Japan's June current account data (update).

-(AU) Australia said to widen orders on China investors in rare earth company; Northern Minerals said Australia's Treasurer amended the Jul 2026 interim decisions by tightening curbs on 2 of Northern Mineral's shareholders ordered to divest; the ongoing matter concerns 'national security' – US financial press.

-(AU) Barrenjoey Capital Partners reportedly in discussions to purchase part of NZ brokerage Craigs - AFR.

-(AU) FT: Billionaire’s financial data group Ion Investment Group ‘chased’ by landlords for overdue rent - update.

-(AU) WBC.AU Reports Q3 (A$) NPAT 1.8B v 1.9B y/y.

China/Hong Kong

-(CN) Shanghai Composite opens +0.1% at 3,943; (HK) Hang Seng opens +0.5% at 25,805.

-(CN) China July CPI Y/Y: 0.5% V 0.8%E [weekend update].

-(CN) Beijing City loosens home purchase limits - Chinese press [weekend update].

-(CN) China press continues to see RRR and interest rate cuts in 2026 – US financial press [report].

-(CN) Shanghai's Pudong and Hongqiao airports to cancel more than 1,300 flights [60% of Sunday's expected flights] from Typhoon 'Dolphin' - US financial press.

-(CN) China bypasses shipping chokepoints with ‘Ice Silk Road’ through the Arctic; Sea Legend will this week launch the first regular container shipping service through the Arctic - FT.

-(CN) China MOF to issue CNY6B government bonds in Macau on Aug 20th, 2026.

-(CN) Certain China brokers said to further tighten client scrutiny over fears of excessive risk; the article mentions the topic of margin financing - press.

-(CN) Certain small banks in China said to raise deposit rates – Chinese press.

-(CN) Cities in China ‘optimize’ car subsidy policy in order to support demand – Chinese press.

-(HK) Hong Kong Finance Chief Chan Hong Kong expects 1.85M visitors for events during H2; plans to release first 5-year plan in Sept.

-(HK) 3908.HK The bank behind the AI listings bonanza in China; the article comments on CICC which has sponsored multi-billion-dollar listings of several Chinese tech firms - FT.

-(CN) China PBOC sets the yuan mid-point at 6.7884 v 6.7904 prior (strongest level since Feb 10th, 2023).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY18B in 7-day Reverse Repos; Net drains CNY45B v drains CNY133B prior.

Japan

-(JP) Nikkei 225 opens +0.5% at 65,869.

-(JP) BOJ SUMMARY OF OPINIONS (MPM): Vital to stop underlying CPI deviating above 2%; Must ensure nimbleness of policy decisions and be open to rate hike sizes; Cost of delaying rate hike cannot be said to be small.

-(JP) Japan govt defense budget expected to record ¥8.9T+ in final proposal - Japanese press [weekend update].

-(JP) Japan Jun Current Account Balance: -¥92.3B v +¥1.512Te.

-(JP) Japan's Takaichi Cabinet approval rating rises +0.9ppt to 62.5% - FNN poll.

-(JP) Japan MOF releases Jul flows data: Foreigners purchased net ¥1.30T in Japan equities.

-(JP) Japan July Bank Lending Y/Y: 5.4% v 5.7% prior.

-(JP) Japan considers domestic AI in defense, rivaling Sakana AI - Yomiuri.

Korea

-(KR) Kospi opens +0.8% at 6,306

-(KR) Korea Exchange activates sidecar on Kosdaq following Kosdaq 150 FUTs rising by +6%, programme trading halted for five-minutes.

Other Asia

-(ID) Indonesia July Consumer Confidence: 116.8 v 117.8 prior.

-(PH) Philippines Central Bank Gov Remolona: With Q2 GDP growth, there's less pressure to hike.

-(PH) Manila-US Senior Defense Official Colby: America's interest more engaged than ever in Indo Pacific, means strong and growing investment in region.

-(PH) Philippines Central Bank (BSP) Dep Gov Abenoja: Inflation may have plateaued.

-(PH) Philippines receives an up to $600M grant from the US for its health sector - US financial press.

-(MY) Malaysia PM Anwar to undergo medical checks and be under observation for 2 days - Press Secretary statement.

-(MY) Malaysia Plantation Minister [Noraini Ahmad]: Strengthening bio-fuel, bio-diesel industry - Ministry's Monthly Gathering.

North America

-(US) BRK.A (Berkshire Hathaway): Reports Q2 (Class B) $11.91 v $5.73 y/y, total Rev $101.8B v $92.5B y/y; Net earnings attributable to shareholders: $25.7B v $12.4B y/y [weekend update].

-(US) Fed’s Barkin (non-voter): Jobs data was very consistent with a sector in weak balance; Job data is low hire, low fire; This data doesn't 'feel very good,' but it is where it is [weekend update].

-(US) Fed Reserve Vice Chair for Supervision Bowman (voter): policy is “well positioned” to bring inflation back to 2% and supported keeping the federal funds rate on hold at the July meeting [weekend update].

-(US) Reportedly US Senate has scheduled a vote on the Clarity Act (cryptocurrency bill) for Sept 15th - press [weekend update].

-(US) OPENAI.IPO Will delay release of Astra model due to cyber capabilities; Scales up testing of safeguards - Axios [weekend update].

-(US) SWITCH.IPO Reportedly has filed confidentially for an IPO, expected in November - press [weekend update].

-(US) NVDA Reportedly agreed to invest up to $3B in Lancium, an energy technology and infrastructure company - The Information.

-(US) China-free batteries made from salt are finally here [sodium-ion batteries] – WSJ [update].

-(US) Taylor Farms to pull salsa and guacamole over Salmonella concerns [amid Salmonella outbreaks from jalapeño peppers to CMG/Chipotle, and a Cyclospera multistate outbreak from the provision of De Mexico iceberg lettuce to YUM/Taco Bell] - US financial press.

-(US) President Trump to participate in a tele-rally at 6:30pm, 7:00pm ET.

-(US) AAPL Apple said to now be testing chips from CXMT; cites people familiar with the mater - financial press [update].

-(US) AAPL Said to have removed Webpage related to Apple Intelligence integration with Qwen from the official website; Apple also said to have noted 'use Qianwen with Apple Intelligence on Mac feature yet to be launched in China' - update.

-(US) 4516.JP US Court refers CAP-1002 dispute to arbitration.

-(CO) New Colombia Pres Abelardo de la Espriella says he will defeat narco terrorism and criminal organizations without a truce; US Plans to announce a $1B support package for Colombia's new President - press [weekend update].

Europe

-(UK) UK Regulator prepares framework for tokenized gold - FT.

-(UK) Senior UK detective is under investigation for alleged misuse of AI - FT.

-(NL) Netherlands Jun Manufacturing Production M/M: -1.3% v +0.1% prior; Y/Y: 4.6% v 4.9% prior.

-(NL) Netherlands July Producer Confidence Index: 2.4% v 1.3% prior.

-(HU) Hungary ruling party selects former supreme court head Baka as president; Will be officially elected by Parliament on Aug 11th.

Middle East

-(IR) Iran's Supreme National Security Council issues six demands to the US (update) [weekend update].

-(SA) Yemen Houthis said they attacked Saudi ARAMCO Jazan refinery, near Red Sea port city of Mocha - Press [weekend update].

-(IR) Iran President Pezeshkian: Now is the best time for an agreement because Iran is 'strong and united and seen as victorious in war' [weekend update].

-(IR) UKMTO reports vessel near Oman was struck by an unknown projectile; Caused a fire onboard but it has been extinguished [weekend update].

-(YE) Follow up: Yemeni Military: Houthi attack on Mocha port killed 7, wounded 30 [people].

-(AE) ADNOC Gas guides 2026 Capex $4.5-5.0B.

Levels as of 01:20 ET

Nikkei 225 +2.0%; ASX 200 -0.3%; Hang Seng +0.6%; Shanghai Composite +0.1%; Kospi +0.7%.

Equity S&P500 Futures +0.1%; Nasdaq100 +0.3%; DAX flat; FTSE100 -0.4%.

EUR 1.1568-1.1548; JPY 158.39-157.58; AUD 0.7071-0.7057; NZD 0.5899-0.5879.

Gold -0.2% at $4,335/oz; BTC +0.4% at $65,098; WTI Crude Oil +0.3% at $78.42/bbl; Copper +0.3% at $6.6085/lbs.