US stocks finished mostly lower following weak ISM Services data - Newsquawk Asia-Pac Market Open

• US stocks finished mostly lower with the major indices in the red to varying degrees although the small-cap Russell 2000 bucked the trend, while the highlight of the day was US President Trump's interview on CNBC whereby he spoke on a wide range of topics and noted that both Kevin’s (Warsh & Hassett) and two others are the candidates for the next Fed Chair. Trump also commented on trade and warned if the EU does not make the US investments agreed upon in the deal, the EU will pay tariffs of 35%, but if investments are made, tariffs will be cut to 15% (from 30%), while he repeated that he will be raising India tariffs substantially in the next 24 hours as they keep purchasing Russian oil. Data-wise, ISM Services PMI disappointed, with the headline printing below the bottom end of the forecast range, while the employment sub-index fell further into contractionary territory.
• USD edged slight gains but with upside capped following early headwinds from a soft ISM Services PMI report, while US President Trump's interview on CNBC was the highlight in which he covered many topics, including trade, whereby he threatened the EU with 35% tariffs if they didn't adhere to the agreed-upon US investments, while the planned substantial tariff raise on India from 25% is to come in the next 24 hours.
• Looking ahead, highlights include New Zealand Employment and Labour Cost, Australian AIG Manufacturing and Construction, Japanese Labour Cash Earnings, Thai CPI, RBI Rate Decision, Supply from Australia.

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LOOKING AHEAD

• Highlights include New Zealand Employment and Labour Cost, Australian AIG Manufacturing and Construction, Japanese Labour Cash Earnings, Thai CPI, RBI Rate Decision, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks finished mostly lower with the major indices in the red to varying degrees although the small-cap Russell 2000 bucked the trend, while the highlight of the day was US President Trump's interview on CNBC whereby he spoke on a wide range of topics and noted that both Kevin’s (Warsh & Hassett) and two others are the candidates for the next Fed Chair. Trump also commented on trade and warned if the EU does not make the US investments agreed upon in the deal, the EU will pay tariffs of 35%, but if investments are made, tariffs will be cut to 15% (from 30%), while he repeated that he will be raising India tariffs substantially in the next 24 hours as they keep purchasing Russian oil. Data-wise, ISM Services PMI disappointed, with the headline printing below the bottom end of the forecast range, while the employment sub-index fell further into contractionary territory.
• SPX -0.49% at 6,299, NDX -0.73% at 23,019, DJI -0.14% at 44,112, RUT +0.60% at 2,226.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said if the EU do not make the US investments agreed, they will pay tariffs of 35%, but if investments are made, tariffs are cut to 15% (from 30%), while he added EU trade details are USD 600bln to the US and anything else that he wants. Trump said India is currently at 25%, but will be raising it substantially in the next 24 hours and the sticking point with India is that tariffs are too high, as well as noted that President Xi called for a meeting with him and that China wants a meeting with the US. Trump also said he will be announcing semiconductors and chips in the next week or so and will be putting an initially small tariff on pharma but in one year, will go up to 150-250%.
• EU Trade Chief Sefcovic said he is in contact with US Commerce Secretary Lutnick and USTR Greer, with talks continuing in a "constructive spirit".
• EU official said they are already seeing implementation of the EU-US framework trade deal and seeing an all-inclusive tariff rate of 15% in the US executive order. The official said it means the most favoured nation rate is included within the US 15% rate and the 15% rate on section 232 such as pharma will kick in once the US investigation is complete, while a 15% rate applies on cars, but steel discussions are taking longer and need to discuss volumes.
• EU official said they are very determined to make sure that wine will benefit from lower US trade barriers but cannot say if he is optimistic or not, regarding the fate of wines in US talks.
• Canadian PM Carney said Canada will provide up to CAD 700mln in loan guarantees to the softwood lumber industry to help it cope with US duties and Canada will provide CAD 500mln to help speed the lumber industry's product development and market diversification. Furthermore, they will look at other opportunities to remove tariffs to help Canadian industries work more effectively.
• Mexican President Sheinbaum said the US-Mexico security deal is ready but they are yet to decide on the date the security deal will be signed.
• Brazilian President Lula said US President Trump did not have the right to announce taxation how he did, and Brazil wants to trade with everyone. Lula said he will not call Trump because he does not want to talk but would call to invite Trump to the COP-30 and will use all applicable means including the WTO to defend their interests.

NOTABLE HEADLINES

• US President Trump said on labour statistics that it is antiquated and political, while he reiterated that Payrolls numbers were rigged. Trump said Fed Chair Powell is highly political and reiterates "too late" Powell, while he stated that both Kevin's are very good (Warsh and Hassett), and he also has two other candidates regarding the next Fed Chair. Trump also commented that Kugler's replacement will come very soon and could be the next Fed Chair, and stated that he loves Scott Bessent, but he wants to stay where he is (US Treasury Secretary).
• A group of US Democratic congressmen is set to introduce a bill that aims to make it more difficult for US President Trump to fire the head of a statistics agency, according to WSJ.
• NY Fed Household Survey (Q2): Total household debt rises 185bln Q/Q to USD 18.39tln.
• Atlanta Fed GDP Now (Q3 25): 2.5% (prev. 2.1%)

DATA RECAP

• US S&P Global Services PMI Final (Jul) 55.7 (Prev. 55.2)
• US S&P Global Composite PMI Final (Jul) 55.1 (Prev. 54.6)
• US ISM N-Mfg PMI (Jul) 50.1 vs. Exp. 51.5 (Prev. 50.8)
• US ISM N-Mfg Price Paid Idx (Jul) 69.9 (Prev. 67.5)
• US ISM N-Mfg Bus Act (Jul) 52.6 (Prev. 54.2)
• US ISM N-Mfg Employment Idx (Jul) 46.4 (Prev. 47.2)
• US ISM N-Mfg New Orders Idx (Jul) 50.3 (Prev. 51.3)

FX

• USD edged slight gains but with upside capped following early headwinds from a soft ISM Services PMI report, while US President Trump's interview on CNBC was the highlight in which he covered many topics, including trade, whereby he threatened the EU with 35% tariffs if they didn't adhere to the agreed-upon US investments, while the planned substantial tariff raise on India from 25% is to come in the next 24 hours.
• EUR was ultimately flat on the day despite the mostly weaker-than-expected PMI data from the bloc, while there were comments from ECB's Holzmann who advocated for keeping rates unchanged and would not exclude that the next rate move will be a hike.
• GBP marginally strengthened in the aftermath of better-than-expected Services PMI but with the upside capped amid quiet UK-specific newflow.
• JPY weakened with USD/JPY extending above the 147.00 level alongside a rise in front-end US yields.

FIXED INCOME

• T-notes were choppy amid soft ISMs and supply with eyes on Kugler replacement.

COMMODITIES

• Oil prices were lower with pressure seen on headline news including both Trump and Russia with the latter reportedly weighing a Ukraine air-truce offer to Trump on the war.
• US Private Inventory Data (bbls): Crude -4.2mln (exp. -0.6mln), Distillate +1.6mln (exp. +0.8mln), Gasoline -0.9mln (exp. -0.4mln), Cushing +1.7mln.
• US President Trump said energy prices are down and stocks are up, while he added that OPEC wants to drill more and if energy prices do go down, Russian President Putin will stop killing people.
• Russia's crude output was slightly above the OPEC+ target in July.

GEOPOLITICAL

MIDDLE EAST

• Israeli Prime Minister Netanyahu is proposing that Israeli troops fully “occupy” the Gaza Strip and the issue was to go before the Israeli cabinet, according to ABC News.
• Israel's Channel 12 said the plan to occupy Gaza in its entirety will be presented on Thursday to the Council of Ministers for approval, according to Sky News Arabia.
• Israeli PM Netanyahu's discussion on the continuation of the war in Gaza ended and the direction is to go for the occupation of the Gaza Strip, according to an Israeli source cited by i24NEWS.

RUSSIA-UKRAINE

• Ukrainian President Zelensky confirmed a conversation with US President Trump in which they discussed Russia sanctions, while he said Ukraine has prepared a draft agreement on drones with the US, and is ready to discuss in detail and sign.
• US President Trump reportedly readies fresh sanctions against Russia’s shadow fleet if Russian President Putin does not agree to a ceasefire in Ukraine by Friday, according to FT.
• US Special Envoy Witkoff will be in Moscow on Wednesday to meet with Russian leadership, according to Reuters citing a source.
• Russia is reportedly weighing a Ukraine air-truce offer to US President Trump on war, according to Bloomberg.
• Russian President Putin is unlikely to "bow" to a sanctions ultimatum from US President Trump that expires this Friday which would see Russia subject to new sanctions and a 100% tariff on nations that buy its oil, while Putin still wishes to capture four Ukrainian regions in their entirety, according to Reuters.
• Russia's Kremlin said regarding US pressure against India, that the US's attempt to stop nations from trading with Russia is illegal. Kremlin also said Russia no longer considers itself bound by any limits on intermediate-range missile deployment.

OTHER

• Pakistan reportedly violated the ceasefire along the LoC in Jammu and Kashmir, indulging in unprovoked firing in the Poonch sector, according to Economic Times citing PTI.

ASIA-PAC

NOTABLE HEADLINES

• PBoC said it is to accelerate the increase in reserves and production of important minerals, as well as improve the ability to ensure the supply of strategic resources. PBoC will guide banks to offer financial solutions for the stable operation of enterprises that are affected by "external factors" and will strengthen macroeconomic policy orientation and optimise the environment for policy implementation. Furthermore, it is to increase support for medium and long-term loans and credit loans to the manufacturing industry.
• China is to waive tuition fees for the final year of preschool education at public kindergartens starting in the Autumn semester of 2025.

EU/UK

NOTABLE HEADLINES

• ECB's Holzmann said they should keep interest rates where they are and await further economic development, while he added that they shouldn't worry about satisfying market expectations and he largely shared the view on the Governing Council that now is the time to wait. Furthermore, he said would not exclude that the next rate move will be a hike and noted there is too much uncertainty to say.

DATA RECAP

• UK S&P Global Services PMI (Jul) 51.8 vs. Exp. 51.2 (Prev. 51.2)
• UK S&P Global PMI Composite (Jul) 51.5 vs. Exp. 51.0 (Prev. 51.0)
• German HCOB Services PMI (Jul) 50.6 vs. Exp. 50.1 (Prev. 50.1)
• German HCOB Composite Final PMI (Jul) 50.6 vs. Exp. 50.3 (Prev. 50.3)
• French HCOB - Services PMI (Jul) 48.5 vs. Exp. 49.7 (Prev. 49.7)
• French HCOB Composite PMI (Jul) 48.6 vs. Exp. 49.6 (Prev. 49.6)
• Italian HCOB Services PMI (Jul) 52.3 vs. Exp. 52.6 (Prev. 52.1)
• Italian HCOB Composite PMI (Jul) 51.5 (Prev. 51.1)
• EU HCOB Services Final PMI (Jul) 51.0 vs. Exp. 51.2 (Prev. 51.2)
• EU HCOB Composite Final PMI (Jul) 50.9 vs. Exp. 51.0 (Prev. 51.0)
• EU Producer Prices MM (Jun) 0.8% vs. Exp. 0.8% (Prev. -0.6%)
• EU Producer Prices YY (Jun) 0.6% vs. Exp. 0.6% (Prev. 0.3%)