NQ underperforms after sharp tech-induced losses in APAC, USD firms into "live" Fed meeting - Newsquawk US Market Open

European bourses began the session firmer despite sharp tech-induced losses in APAC.
Oman is said to have presented to Iran a proposal for a joint regional mechanism to manage the Strait of Hormuz with "voluntary fees"; Iran is reportedly demonstrating 'flexibility' over Hormuz Strait operations.
Crude futures are softer amid continued efforts to end the US-Iran war, and with the pause in strikes at day three.
DXY was directionless throughout most of the morning before edging higher in recent trade, with the FOMC looming on Wednesday.
Looking ahead, highlights include US ADP Employment Change Weekly, Goods Trade Balance Advance (Jun), Retail Inventories Ex Autos Advance (Jun), Wholesale Inventories Advance (Jun), Consumer Confidence, Atlanta Fed GDP (Q2). Supply from the US. Earnings from PayPal, Boeing, and Ford.

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EUROPEAN TRADE

EQUITIES

European bourses began the session firmer despite sharp losses in APAC, particularly the KOSPI (-10%). At the time of writing, the Euro Stoxx 50 sees gains capped as ASML continued to weigh following reports China started DUV tool production, with the stock extending losses after Monday’s -8.5% decline.
Sectors are mostly in the green, with Optimised Personal Care leading and Energy lagging, the former weighed on by LVMH post earnings. Broader sentiment is supported by optimism around US-Iran talks (see commodities for further details), which weighs on crude and underpins equities.
Movers: ASML extends losses (-1.5%) on China DUV concerns. In earnings, LVMH (-1%) reported a revenue beat but softer Fashion & Leather Goods sales, Unilever (+6%) beat and raised guidance, while Mercedes-Benz (+3%) cut revenue guidance but maintained margins. In APAC, SK Hynix and Samsung fell ~12% amid memory concerns linked to CXMT’s listing.
US equity futures are mostly lower, with NQ (-0.8%) under pressure from tech concerns and ahead of key earnings this week (Microsoft, Meta, Qualcomm, Amazon, Apple), set to test the AI trade.
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FX

DXY was directionless for most of the European morning before picking up in recent trade despite a lack of US-specific catalysts, with markets increasingly viewing the upcoming Fed meeting as potentially “live”. Tightening bets remained around a 30% probability of a 25bps hike, though softer crude limited further upside in the Buck. DXY has been edging higher in recent trade after topping the 1st July peak (101.60) and aims for the 25th June high at 101.75.
JPY retreats slightly against the USD given the recent modest strength in the DXY; USD/JPY remains under the 23rd July peak at 162.42.
EUR is modestly softer against the USD amid the lack of fresh catalysts. EUR/USD reside towards the bottom end of a 1.1354-1.1380 range at the time of writing.
GBP has dipped under 1.33 (vs high 1.3305) amid the aforementioned DXY upside with limited UK-specific drivers in the session.
Antipodeans underperform, led by AUD, which drifted lower to a 0.6963 base following remarks from RBA Governor Bullock that were viewed as lacking strong forward guidance. NOK also lagged as oil prices declined, with the cross nearing parity (1.001).
PBoC set USD/CNY mid-point at 6.7928 vs exp. 6.7730 (prev. 6.7911).

FIXED INCOME

UST are firmer, gaining around five ticks at best to a 108-24+ peak, just above Monday’s 108-22 high but still shy of last week’s 109-00 and 109-08+ peaks. The move was driven by the pullback in energy amid US-Iran diplomacy, with focus turning to incoming data and a 7yr auction.
Bunds trade in line with USTs but with slightly greater magnitude, holding around 10 ticks below the 125.21 peak while still posting gains of a similar amount. The upside is supported by softer energy prices, with some caution ahead of the Fed given the ~30% implied probability of a July hike.
Gilts opened on the front foot and outperform, gapping higher by around 10 ticks before extending to a 87.48 peak, taking out last week’s high. The benchmark then looks towards prior resistance levels at 87.60, 87.72 and 87.82.
Italy sell EUR 2.5bln vs exp. EUR 2-2.5bln 2.20% 2028 and 0.50% 2028 BTP and EUR 3bln vs exp. EUR 2.5-3bln 2.00% 2037 BTPei. 2.20% 2028: b/c 1.79x (prev. 1.51x) & average yield 2.89% (prev. 2.74%). 0.50% 2028: b/c 1.90x & average yield 2.92%. 2.00% 2037 BTPei: b/c 1.4x & real yield 2.04%.
UK DMO sold GBP 750mln of 0.125% Jan 2028 Gilts via tender: average yield 4.090% (prev. 3.989%); b/c 5.35x (prev. 4.97x).
Netherlands sold EUR 2.99bln (exp. 2.0-3.0bln) 2.75% 2036 DSL: average yield 3.206% (prev. 3.209%).
Japan sold JPY 649bln in 10yr, 20yr and 30yr JGBs in enhanced liquidity auction; b/c 2.68 vs. Prev. 2.92. Highest accepted spread +0.004% vs. Prev. +0.020%. Allotment of bids at highest spread 87.6152% vs. Prev. 98.6666%.
Australia sold AUD 800mln 4.25% October 2036 bonds, avg. yield 5.0345%, b/c 4.70.

COMMODITIES

Crude futures are lower as US-Iran diplomacy (at face value) continues to improve sentiment, with Oman’s Hormuz proposal and reports of Iranian “flexibility” weighing on prices. Brent Oct’26 trades towards the bottom of a USD 83.58-85.60/bbl range, while WTI Sep’26 sits near the lower end of USD 80.36-82.43/bbl. Dutch TTF was also softer by almost 2%, finding support around EUR 56/MWh.
Precious metals are subdued despite lower oil, as geopolitical risk premium unwinds and caution emerges ahead of the FOMC. Spot gold trades within a narrow USD 4,034-4,081/oz range, inside Friday’s USD 4,022-4,082/oz band.
Base metals are on a softer footing, though losses were contained by constructive geopolitics. The complex is weighed on by weak APAC tech sentiment, with 3M LME copper trading within a USD 13,620.00-13,739.83/t range.
Libya's NOC said it halted production at the El Feel oil field (80-90k BPD) and a partial halt to the Wafa field (20-30k BPD), according to Sky News Arabia & Al Hadath; due to protest action.
Saudi Aramco is mulling new oil pricing to reflect higher freight costs for cargoes loading from Egypt's Sidi Kerir to Asia.
QatarEnergy has extended LNG force majeure for European customers.

TRADE/TARIFFS

Germany said to be working on mapping China's weaknesses in preparation for potential future trade war, Bloomberg reported.
China said it never deliberately pursues a trade surplus and vows to strengthen industry through global coordination, according to Xinhua.
US probes Chinese factories in Vietnam, stoking new levy fears.
US Trade Representative Greer said in Fox News interview new Section 301 tariffs shouldn't cause economic effects we're not already facing, adds tariff rates are comparable to previous tariffs and talks with Mexico are focused on ensuring balanced trade.

NOTABLE EUROPEAN HEADLINES

US diplomats walked out of a UN Security Council meeting after France publicly criticised the Trump administration's human rights record.

NOTABLE EUROPEAN DATA RECAP

Spanish Retail Sales MoM (Jun) M/M 0.3% vs. Exp. -0.3% (Prev. 0.6%).
Spanish Retail Sales YoY (Jun) Y/Y 0.5% vs. Exp. 1.1% (Prev. 1.3%).
Spanish Unemployment Rate (Q2) 9.87% vs. Exp. 10.7% (Prev. 10.83%).
French Consumer Confidence (Jul) 86 (Prev. 84).
Swedish Balance of Trade (Jun) 2.60B (Prev. 2.9B).
UK BRC Shop Price Inflation (Jul) 0.9% vs. Exp. 1.2% (Prev. 1.2%).

CENTRAL BANKS

Citadel Securities said Fed chair Kevin Warsh could surprise with a rate hike this week, which would bolster his credibility in the inflation fight.
RBA Governor Bullock said board is ready to hike cash rate further if needed, while key question is if tightening already delivered is enough to slow inflation. said:. Policy works with a lag, meaning the full impact of this year's rate increases has yet to emerge. The strongest contribution monetary policy can make is to preserve low and stable inflation. Further slowing in demand growth will likely be needed to bring inflation lower. Some additional easing in labour market conditions will probably be required. The economy has adjusted gradually and broadly in line with expectations. Monetary policy cannot solve Australia's weak productivity growth. Underlying inflation has developed as expected but remains too high. Businesses continue to report increasing non-labour cost pressures. The housing market has softened more than anticipated. Demand growth is moderating broadly in line with the May baseline forecasts. It remains too early to judge the full economic impact of the recent oil shock. Don't know what the board will decide at next meeting, will depend on whether board thinks policy is restrictive. Will have some difficult decisions to make if board thinks inflation is not coming down.
Philippine Central Bank Governor said large inflation impact seen in 2027 and 2028, adds peso decline could also cause increase in inflation, also sees small chance for aggressive tightening. said:When the dollar is strong, we limit intervention to maintain order.

NOTABLE US HEADLINES

US Pacific Tsunami Warning Center said the tsunami threat from the Japan earthquake has now passed, with no tsunami threat remaining for Japan's coast.
Shots fired at US consulate in Toronto for the second time this year, according to the New York Post.
US Senate votes to advance Trump nominee Clayton for Director of National Intelligence role.

GEOPOLITICS

RUSSIA-UKRAINE

Russia's Tyumen oil refinery halted operations on July 25 after a drone attack, sources say.
Finland temporarily closes airspace near Russia amid potential stray drone.
EU hesitates to target an Irish alumina plant accused of supplying Russia's war industry, amid fear of cutting off supplies critical for European industry, according to FT.
US President Trump will meet with Ukrainian President Zelensky at 09:30EDT/14:30BST and will meet with Israeli PM Netanyahu at 11:30EDT/16:30BST on Tuesday.
US Senate is expected to start voting on Russia sanctions bill as soon as Tuesday during Ukrainian President Zelensky's visit.

MIDDLE EAST

A military source from Sanaa, Yemen reportedly stated that the recent Yemeni operation showed that Saudi Arabia's oil facilities are now on the list of legitimate targets available to Yemen, Tasnim reported.
Iran has lost c. 230mln/CM of gas production capacity during the US-Iran conflict, JRTV reported.
Iran demonstrating 'flexibility' over Hormuz Strait operations, sources tell Al Jazeera.
Oman is said to have presented to Iran a proposal for a joint regional mechanism to manage the Strait of Hormuz with "voluntary fees", according to Reuters sources. The source said Iran would not exercise sole control of the Strait.
Iran's Foreign Minister is said to have held phone called on Strait of Hormuz security with Saudi and Oman officials.
US-led talks between Israel and Lebanon will take place in Rome on August 4-6, according to a State Department official. US official noted significant momentum in Israel-Lebanon peace track. Talks are to focus on redeployment and border issues in Lebanon.
US officials say that sanctions may damage Iran more than bombing and Trump administration said to focus on economic pressure to force Iran deal, according to Axios.
Oman's Foreign Minister held called with counterparts from Iran, Saudi Arabia, Qatar, Kuwait and Egypt to discuss efforts to reduce tensions, according to Iran International. Talks focused on pursuing practical, fair and sustainable understandings through political and diplomatic channels, ensuring safe navigation through the Strait of Hormuz, and restoring the uninterrupted flow of trade and global supply chains.
Iran will maintain special regime for passage of Russian vessels through the Strait of Hormuz, according to TASS.
Israel conducts artillery attack on eastern Gaza City, according to SNN.
Hamas delegations is carrying positive positions on the roadmap presented by Gaza representative Mladenov and the mediators, provided Israel agrees, Al Jazeera reported citing sources.
Israeli PM Netanyahu reportedly struggled to get on US President Trump's schedule for today, Axios reported, suggesting the Israeli PM's influence is waning.
Satellite images show that recent Iranian strikes hit Amazon (AMZN) data centres.
Reports of an Israeli drone airstrike in southern Lebanon, Al Jazeera reported.
Iranian, Omani, and Saudi Foreign Ministers held a phone call yesterday; notable details light.
Occurrences of explosions in Saudi Arabia and Jordan, ISNA reported citing sources; six explosions occurred near oil and gas facilities in the Al-Sharqiyah region of Saudi Arabia.
Reports of widespread drone attacks on eastern Jordan’s desert, Press TV reported.
Jordanian army said that they shot down a drone that violated Jordanian airspace in the eastern desert.
Iraqi sources report attack on separatist group's weapons depot in Sulaymaniya, Iraq.
Report noted that drone and rocket attack in Erbil was near the US consulate.
More than seven explosions heard in Erbil, northern Iraq with the headquarters of separatists rocked, while US Consulate in Erbil was also reportedly targeted, according to IRIB.
Explosions reported in Erbil, northern Iraq, with the Khor Mor Gas Field attacked, according to Tasnim and SNN.

CRYPTO

Bitcoin is subdued but price action is somewhat contained, with the crypto still north of the USD 63,000.

APAC TRADE

APAC stocks were mostly negative amid a tech bloodbath and competition concerns following reports that China had started mass production of domestically developed DUV lithography equipment, which had pressured ASML shares and the Nasdaq yesterday.
ASX 200 bucked the trend as strength in telecoms and the consumer sectors offset the weakness in miners, materials and resources.
Nikkei 225 briefly fell beneath the 62,000 level amid the tech-related losses, with Kioxia heavily pressured.
KOSPI triggered a circuit breaker with double-digit declines seen in Samsung Electronics and SK Hynix.
Hang Seng and Shanghai Comp were lower but with downside limited in Hong Kong amid the mixed performance among the local tech bluechips, while the mainland was subdued as trade frictions lingered with the US reportedly probing Chinese factories in Vietnam.

NOTABLE ASIA-PAC HEADLINES

Japan's Finance Minister Katayama said must communicate with JGB market in run-up to budget compilation, and we hadn't done that. said:. Believes the government's relationship with the BoJ has been smooth. Very good that final version of the Economic Blueprint has won market understanding. Not currently considering JGB buybacks. Global bond markets have been affected by various factors such as US monetary policy, Ukraine and Middle East situations. Weak yen can have both merits and demerits. Won't comment on specific FX levels and won't comment on potential intervention. No change in stance that we're ready to respond on Forex as needed.
Japanese Finance Minister Katayama said taking price relief measures one after another, also noted that foreign banks' participation in projects under Japan's US investment scheme wipes out concerns about dollar funding.
5.0 magnitude earthquake in Qinghai, China, CENC reported.
Japan's Nuclear Regulation authority said there are no irregularities at nearby nuclear power plants after earthquake. Includes Ikata, Genkai, Sendai plants.
Earthquake of prelim 7.1 magnitude hits Japan's Kyushu, NIED reported; issues tsunami warning of 1 metre, NHK reported.

NOTABLE APAC DATA RECAP

Japanese BoJ Core CPI (Jun) 2.7% (Prev. 2.7%).
Korea (Republic of) Consumer Confidence (Jul) 106.8 (Prev. 106.6).

NOTABLE GLOBAL EQUITY HEADLINES

Chinese Co. Aishengna's DUV machines remain behind the equivalent ASML (ASML NA) model, Reuters reported citing sources.
Trendforce said "AI demand pushes Japanese and Korean MLCC suppliers to record monthly shipments; consumer-grade order spillovers continue to surge".