US stocks finished lower on a hawkish Powell although futures rebounded after-market on earnings from Meta and Microsoft - Newsquawk Asia-Pac Market Open

• US stocks and Treasuries were sold, while the dollar saw a notable bid in the wake of a hawkish Fed Chair Powell. In the FOMC rate decision, the central bank held rates at 4.25-4.50%, as expected, with Governors Waller and Bowman dissenting in favour of a 25bps cut, although little move was seen. In Powell's presser, he said no decision has been made about the September meeting, and they will not let tariffs become inflationary, because they will make sure it does not become serious by deploying their tools. In the wake of these comments, particularly the latter, US indices and T-Notes sold off to session lows, while the Dollar rose to peaks, and Fed money market pricing became more hawkish, with only 38bps of cuts seen by year-end now vs 46bps post Fed statement. However, equity futures rebounded after-hours with strength in tech/AI-related names after Microsoft (MSFT) and Meta (META) smashed Q2 earnings expectations.
• USD strengthened in which the DXY approached just shy of the 100.00 level which was facilitated by stronger-than-expected GDP data and after hawkish remarks from Fed Chair Powell following the FOMC meeting where the Fed held the FFR, as expected. The decision wasn't unanimous, with Governor Waller and Vice Chair of Supervision Bowman, dissenting for a 25bps rate cut, albeit the two members were known to be out of the MPC consensus heading into the meeting. Moreover, Powell sounded determined in the fight against inflationary upside risks stemming from tariffs, saying in the end, "this will not turn out to be inflation, because we will make sure it is not by deploying our tools".
• Looking ahead, highlights include South Korean & Japanese Industrial Production & Retail Sales, Australian Building Approvals, Private Sector Credit & Retail Sales, Chinese Official PMIs, BoJ Policy Decision, Comments from BoJ Governor Ueda & RBA's Hauser.

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LOOKING AHEAD

• Highlights include South Korean & Japanese Industrial Production & Retail Sales, Australian Building Approvals, Private Sector Credit & Retail Sales, Chinese Official PMIs, BoJ Policy Decision, Comments from BoJ Governor Ueda & RBA's Hauser.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks and Treasuries were sold, while the dollar saw a notable bid in the wake of a hawkish Fed Chair Powell. In the FOMC rate decision, the central bank held rates at 4.25-4.50%, as expected, with Governors Waller and Bowman dissenting in favour of a 25bps cut, although little move was seen. In Powell's presser, he said no decision has been made about the September meeting, and they will not let tariffs become inflationary, because they will make sure it does not become serious by deploying their tools. In the wake of these comments, particularly the latter, US indices and T-Notes sold off to session lows, while the Dollar rose to peaks, and Fed money market pricing became more hawkish, with only 38bps of cuts seen by year-end now vs 46bps post Fed statement. However, equity futures rebounded after-hours with strength in tech/AI-related names after Microsoft (MSFT) and Meta (META) smashed Q2 earnings expectations.
• SPX -0.12% at 6,363, NDX +0.16% at 23,345, DJI -0.38% at 44,461, RUT -0.47% at 2,232.
• Click here for a detailed summary.

FOMC

• Fed left rates on hold at 4.25-4.50%, as expected, in which Kugler did not vote and both Waller and Bowman dissented, preferring to lower the FFR rate by 25bps. Fed said recent indicators suggest that the growth of economic activity moderated in the first half of 2025 (prev. Recent indicators suggest economic activity has continued to expand at a solid pace) and stated that Inflation remains somewhat elevated, while the unemployment rate remains low, and labour market conditions remain solid. Fed also stated that uncertainty about the economic outlook remains elevated (prev. Uncertainty about the economic outlook has diminished but remains elevated) and it maintained language that "In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks."
• Fed Chair Powell said the economy is in a solid position and inflation is somewhat above target, while the labour market is at or near maximum level and he believes the current stance of policy leaves them well positioned to respond in a timely way. Fed Chair Powell said most measures of longer-run inflation expectations are consistent with the Fed's goal and sees the current stance as appropriate to guard against inflation risks, as well as noted that they are on track to wrap up the policy review by late summer and will receive a good amount of data in the coming months.
• Fed Chair Powell said during the Q&A that the economy is not behaving although modestly restrictive policy is holding it back inappropriately, when asked about a September rate cut, while they have made no decisions about September and expect to have more information coming up. Powell said the statement about uncertainty reflects changes since the last meeting and it had not diminished further since the June meeting, as well as noted they are still a ways away from seeing where things settle with many uncertainties left to resolve and it feels like there is much more to come. Fed Chair Powell said regarding the dissents that what you want is a clear explanation and had that today; people thought carefully about this and put their positions out there, while majority was of the view that inflation is above target and maximum employment is at target, which calls for a modestly restrictive stance of policy for now. Furthermore, he said a reasonable base case is that tariffs are one-time price impacts, but in the end, this will not turn out to be inflation, because they will make sure it is not by deploying their tools and are trying to accomplish the goal in an efficient manner.

TARIFFS/TRADE

• US President Trump said the August 1st deadline is the August 1st deadline which stands strong and will not be extended, while Trump also commented that India will be paying a tariff of 25% plus a penalty from August 1st.
• US President Trump said they are negotiating with other countries and the rest will receive a "bill", while he said they are negotiating with India now, and we will see what happens with India which will be known at the end of the week. Trump also stated that they are moving along well with China, as well as noted it is going to work out well and they are going to have a very fair deal with China.
• US President Trump said they are busy working on trade deals and will be meeting with South Korea on Wednesday afternoon which is currently at a 25% tariff, but they have an offer to buy down those tariffs. Trump also stated they have just concluded a deal with Pakistan, whereby Pakistan and the US will work together on developing massive oil reserves, while they are in the process of choosing the oil company that will lead this partnership. Furthermore, he stated that other countries are making offers for a tariff reduction.
• US NEC Director Hassett said US President Trump is to be briefed today on China and will probably want changes before an agreement is announced, while he added the ground is set for very positive developments. Hassett also said that President Trump is frustrated with progress on an Indian trade deal and thinks tariffs will help the situation, with President Trump and USTR Greer to have more information on the additional penalty shortly.
• White House said US President Trump is suspending de minimis exemption for commercial shipments globally, with the de minimis exemption suspension effective August 29th. White House also said that a Trump proclamation imposes universal 50% tariffs on imports of semi-finished copper products and copper-intensive derivative products effective August 1st. Furthermore, the White House said copper input materials and copper scrap are not subject to 232 or reciprocal tariffs.
• White House said Trump signed an executive order implementing an additional 40% tariff on Brazil, bringing the total tariff amount to 50%.
• US Senate Democrats will mount a last-ditch effort to block President Trump's tariffs from taking full effect at the end of this week, according to Axios.
• China's Commerce Minister said following the meeting with a US business delegation, that China and the US are still important trade partners and decoupling will not work.
• French President Macron told the French Cabinet that the EU's framework tariff trade deal with the US is unbalanced but has some good aspects.
• French Finance Minister said the EU negotiation strategy may not have shown enough vigour and it is incorrect to claim the UK secured a better deal than the EU. It was also reported that the French Agriculture Minister said he has little info available but hears a potential "zero for zero" deal for spirits and noted unclear implications for the wine sector.
• Italian Economy Minister says the government has some proposals to make to the US on digital tax to avoid the risk of escalation.
• India's government said regarding US trade that it will take all steps needed to secure national interests.

NOTABLE HEADLINES

• US President Trump said he hears they're going to do it in September, when speaking on the Fed cutting interest rates.
• US President Trump is to sign into law the Veterans Affairs home loan programme reform bill today, according to Bloomberg.
• US President Trump posted "2Q GDP JUST OUT: 3%, WAY BETTER THAN EXPECTED! “Too Late” MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!"
• US Treasury Secretary Bessent said he is confident that momentum is coming back into the economy, while he said people should not panic if there are no deals by August 1st and he was not expecting a rate cut today from the Fed.
• US NEC Director Hassett said the GDP data shows strong growth, while he commented that the Fed is very data-dependent and will eventually catch up. Furthermore, Hassett said data is consistent with the Fed cutting rates and that many economists think the Fed has been too slow.
• US Quarterly Refunding: US Treasury is offering USD 125bln of Treasury securities to refund approximately USD 89.8bln of privately-held Treasury notes maturing, will raise new cash of c. USD 35.2bln.

AFTER-MARKET EARNINGS

• Meta Platforms Inc (META) Q2 2025 (USD): EPS 7.14 (exp. 5.85), Revenue 47.52bln (exp. 44.87bln)
• Microsoft Corp (MSFT) Q2 2025 (USD): EPS 3.65 (exp. 3.35), Revenue 76.44bln (exp. 73.76bln)
• Arm Holdings (ARM) Q1 2026 (USD): Adj. EPS 0.35 (exp. 0.35), Revenue 1.05bln (exp. 1.05bln)
• Qualcomm Inc (QCOM) Q3 2025 (USD): Adj. EPS 2.77 (exp. 2.70), Revenue 10.37bln (exp. 10.30bln)
• eBay Inc (EBAY) Q2 2025 (USD): Adj. EPS 1.37 (exp. 1.30), Revenue 2.7bln (exp. 2.64bln). GMV 19.5bln
• Ford Motor Co (F) Q2 2025 Adj. EPS 0.37 (exp. 0.32), Revenue 50.18bln (exp. 43.21bln)
• Western Digital Corp (WDC) Q4 2025 (USD): Adj. EPS 1.66 (exp. 1.46), Revenue 2.605bln (exp. 2.46bln)

DATA RECAP

• US GDP Advance (Q2) 3.0% vs. Exp. 2.4% (Prev. -0.5%)
• US GDP Sales Advance (Q2) 6.3% vs. Exp. 2.5% (Prev. -3.1%)
• US Core PCE Prices Advance (Q2) 2.5% vs. Exp. 2.3% (Prev. 3.5%
• US Pending Sales Change MM (Jun) -0.8% vs. Exp. 0.3% (Prev. 1.8%)
• US ADP National Employment (Jul) 104.0k vs. Exp. 75.0k (Prev. -33.0k, Rev. -23k)

FX

• USD strengthened in which the DXY approached just shy of the 100.00 level which was facilitated by stronger-than-expected GDP data and after hawkish remarks from Fed Chair Powell following the FOMC meeting where the Fed held the FFR, as expected. The decision wasn't unanimous, with Governor Waller and Vice Chair of Supervision Bowman, dissenting for a 25bps rate cut, albeit the two members were known to be out of the MPC consensus heading into the meeting. Moreover, Powell sounded determined in the fight against inflationary upside risks stemming from tariffs, saying in the end, "this will not turn out to be inflation, because we will make sure it is not by deploying our tools".
• EUR was pressured amid the dollar strength which saw the single currency retreat to near the 1.1400 level despite better-than-expected GDP.
• GBP slipped beneath the 1.3300 handle with pressure seen in the aftermath of the US data and Fed Chair Powell's presser, while there were few pertinent drivers for the UK to support GBP.
• JPY weakened with USD/JPY at a firm footing above the 149.00 level as yield differentials widened and with the attention turning to the BoJ policy announcement.
• BoC maintained its policy rate unchanged at 2.75%, as expected, while BoC Governor Macklem's Opening Statement noted uncertainty about US tariffs on Canada is still high and discussions between Canada and the US are ongoing with US policy remaining unpredictable. Macklem said uncertainty is set to continue and strong core inflation measures have the central bank's attention, while factors driving a rise in core inflation are expected to unwind.

FIXED INCOME

• T-notes were sold on the hot GDP report and settled at lows following some hawkish-leaning comments from Fed Chair Powell.

COMMODITIES

• Oil prices climbed through the duration of the US session with a boost seen on Trump trade headlines.
• US EIA Weekly Crude Stocks w/e 7.698M vs. Exp. -1.288M (Prev. -3.169M)

GEOPOLITICAL

MIDDLE EAST

• Israel PM Netanyahu has not ruled out a plan to destroy the rest of northern Gaza and occupy it, despite the army's warnings about the danger to the hostages, according to Guy Elster citing Haaretz.
• US envoy Witkoff is heading to Israel to discuss the Gaza crisis and may also travel to Gaza and visit Gaza Humanitarian Foundation (GHF) aid centres.
• A senior Israeli official briefed the Saudi Al-Arabiya channel that there are warnings that elements backed by Iran are planning to attack Israel from southern Syria, according to journalist Elster.
• US issues new Iran-related sanctions with the issue of a new Iran-related general license authorising certain transactions and the offloading of cargo involving certain persons or vessels blocked on July 30th.

RUSSIA-UKRAINE

• Polish PM Tusk sees a chance that the Russia-Ukraine conflict could be paused in the near future and said “There are many signs pointing to the fact that the Russia-Ukraine war may be at least suspended in the nearest time”, according to Bloomberg.
• US Senate Republican Leader Thune said he is prepared to move on the Russia sanctions bill if needed, according to a Fox News interview.
• Two top Senate Republicans laid out a plan to allow allies to finance donations of US weapons and military equipment to Ukraine, according to WSJ.
• Russia's Kremlin said it continues to note all of US President Trump's statements on sanctions, and that Russia has been under a huge number of sanctions for a long time.

ASIA-PAC

NOTABLE HEADLINES

• Japan’s LDP is to hold plenary meeting on August 8th (prev. Aug 7th), according to Kyodo.

EU/UK

NOTABLE HEADLINES

• German Finance Minister urged cabinet ministers to cut spending to close the budget gap of over EUR 30bln in 2027, via an interview with Ard-Tagesthemen.

DATA RECAP

• EU GDP Flash Prelim QQ (Q2) 0.1% vs. Exp. 0.0% (Prev. 0.6%)
• EU GDP Flash Prelim YY (Q2) 1.4% vs. Exp. 1.2% (Prev. 1.5%)
• EU Services Sentiment (Jul) 4.1 vs. Exp. 3.3 (Prev. 2.9, Rev. 3.1)
• EU Consumer Confidence Final (Jul) -14.7 vs. Exp. -14.7 (Prev. -14.7)
• EU Economic Sentiment (Jul) 95.8 vs. Exp. 94.5 (Prev. 94.0, Rev. 94.2)
• EU Industrial Sentiment (Jul) -10.4 vs. Exp. -11.0 (Prev. -12.0, Rev. -11.8)
• German GDP Flash QQ SA (Q2) -0.1% vs. Exp. -0.1% (Prev. 0.4%)
• German GDP Flash YY SA (Q2) 0.4% vs. Exp. 0.2% (Prev. 0.0%)