US stocks gained ahead of NFP, while President Trump announced a US-Vietnam trade deal - Newsquawk Asia-Pac Market Open

• US stocks mostly closed in the green but with pressure seen in the European morning after a woeful ADP report, which heavily missed expectations. Nonetheless, risk appetite started to stage a comeback around the opening bell with upside in Apple (AAPL) following an upgrade and with Tesla (TSLA) delivery numbers not as bad as feared, while a deal between the US and Vietnam on trade also lifted sentiment.
• USD was modestly higher and was largely helped by strength against GBP due to idiosyncratic risks in the UK but with the gains in the DXY limited amid headwinds from US data owing to a dismal ADP print which showed a loss of 33k workers, while the attention turns to Thursday's Non-Farm Payrolls release ahead of the US Independence Day holiday.
• Looking ahead, highlights include New Zealand ANZ Commodity Prices, Australian Trade Data, Chinese Caixin Services & Composite PMIs, Supply from Japan, US markets will close early on Thursday.

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LOOKING AHEAD

• Highlights include New Zealand ANZ Commodity Prices, Australian Trade Data, Chinese Caixin Services & Composite PMIs, Supply from Japan, US markets will close early on Thursday.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks mostly closed in the green but with pressure seen in the European morning after a woeful ADP report, which heavily missed expectations. Nonetheless, risk appetite started to stage a comeback around the opening bell with upside in Apple (AAPL) following an upgrade and with Tesla (TSLA) delivery numbers not as bad as feared, while a deal between the US and Vietnam on trade also lifted sentiment.
• SPX +0.47% at 6,227, NDX +0.73% at 22,642, DJI -0.02% at 44,484, RUT +1.31% at 2,226.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump posted that he made a trade deal with Vietnam and that it will be a great deal of cooperation between the two countries. Trump added that the terms are that Vietnam will pay the US a 20% tariff on any and all goods sent into its territory and a 40% tariff on any transhipping.
• US-Vietnam final deal is still being worked on and is to be sealed "within coming weeks" with no numbers included on final tariff rates, while Vietnam will spend USD 8bln to purchase 50 Boeing (BA) aircraft and will buy USD 2.9bln in agriculture goods, according to Politico.
• Japanese trade negotiator Akazawa said Japan and the US are continuing vigorous trade talks and noted that staff-level talks were held on June 30th, while he reiterated that an agreement that would hurt Japan's national interests for the sake of timing should not be made. Furthermore, he will not deny the possibilities of travelling to the US, but has no specific schedule to do so.
• Japanese PM Ishiba said they will boost domestic demand and expand export destinations to protect Japanese industries if auto exports to the US are set to drop.
• FBN's Edward Lawrence said multiple trade sources are telling him that they could get an announcement of a tariff deal with India as early as tomorrow and he was told language on an India deal is being finalised today, while he caveated it is still fluid until President Trump actually signs off on it.
• Mexico's Foreign Minister said a delegation is set to visit Washington D.C. for talks on security, migration, and trade.

NOTABLE HEADLINES

• Fed's Barkin (2027 voter) said probably in assessing the jobs report is impact of slowing immigration and will be looking at the change in the unemployment rate, while he added they have a lot to learn before the next meeting, including jobs, inflation and on trade policy but noted the US economy remains solid.
• US President Trump posted about the growth from the bill and stated "Tariff money has already arrived and is setting new records", adding "We’ve got all the cards, and we are going to use them".
• US President Trump was expected to partake in meetings with House Republicans today, according to Punchbowl's Sherman.
• House Freedom Caucus and other conservatives unveiled major problem points in the Senate bill in a new three-page memo. It was also reported that House Republicans were telling members to go back into their offices and a vote on the rule didn’t look imminent, according to Punchbowl.
• Lots of conservative House Republicans are worried about the Senate’s added Medicaid cuts in the megabill including for provider tax and state-directed payments, according to Politico.
• US FHFA, Fannie Mae and the Freddie Mac Chairman called on Congress to investigate Fed Chair Powell.

DATA RECAP

• US ADP National Employment (Jun) -33.0k vs. Exp. 95.0k (Prev. 37.0k)
• US Challenger Layoffs (Jun) 47.999k (Prev. 93.816k)

FX

• USD was modestly higher and was largely helped by strength against GBP due to idiosyncratic risks in the UK but with the gains in the DXY limited amid headwinds from US data owing to a dismal ADP print which showed a loss of 33k workers, while the attention turns to Thursday's Non-Farm Payrolls release ahead of the US Independence Day holiday.
• EUR saw two way price-action and was marginally softer on the day after gradually recovering from an early dip, while the latest ECB rhetoric had little impact including from ECB's Centeno who stated the ECB remains cautious on the rate path and with ECB's Rehn noting that the ECB should be mindful of the risk that inflation stays persistently below 2% target.
• GBP underperformed amid political uncertainty in the UK which also pressured Gilts amid PMQs where UK PM Starmer refused to confirm whether Chancellor Reeves will remain in her job and refused to rule out tax increases, although the PM's Secretary commented shortly after that the Chancellor has the full support of the PM after questions were raised.
• JPY was rangebound amid ongoing trade-related uncertainty, while Japan's trade negotiator Akazawa reiterated that an agreement that would hurt Japan's national interests for the sake of timing should not be made.

FIXED INCOME

• T-notes tracked Gilts lower ahead of Thursday's NFP report and after a woeful ADP print.

COMMODITIES

• Oil prices saw two-way action, but ultimately settled firmer with analysts citing Iran signing into law the suspension of work with the IAEA and the US-Vietnam trade agreement.
• US EIA Weekly Crude Stocks w/e 3.845M vs. Exp. -1.809M (Prev. -5.836M).

GEOPOLITICAL

MIDDLE EAST

• Israel’s Foreign Minister said it is time to reactivate "snapback" on Iran and the war in Gaza could end tomorrow if Hamas releases hostages and lays down arms, while he added the time has come to reimpose sanctions on Iran.
• Israel's Justice Minister said the time has come to annex the West Bank, while the IDF said the Israeli army launched a new phase of war in Gaza, according to Al Arabiya.
• US State Department said Iran must cooperate fully without further delay and it is unacceptable that Iran chose to suspend cooperation with the IAEA.
• Advisor to the Commander-in-Chief of the IRGC said the war has stopped, but the United States and Israel have not achieved their goals, according to Iran International.
• Iran's Foreign Minister said it seems that their nuclear facilities were severely damaged by US strikes and it seems that it will be a long time before a return to work of their nuclear facilities if possible.
• Iran's Minister of Communications noted internet outages in the country caused by external attacks, according to Al Jazeera.

RUSSIA-UKRAINE

• Russia's Kremlin said regarding reports the US Pentagon halted some missile shipments to Ukraine that "the fewer weapons delivered the sooner the conflict in Ukraine will end", while the Kremlin also said Russia expects the 3rd round of talks with Ukraine soon.
• Ukraine's Minister said Ukraine is ready to buy or rent air defence systems after US aid halt, according to AFP.

ASIA-PAC

NOTABLE HEADLINES

• European Council President Costa met with China's Foreign Minister Wang Yi, while it was separately reported that China’s Foreign Minister said the nation is willing to enhance communication with the EU.
• European Commission VP Kallas and China Foreign Minister Wang and reaffirmed EU's commitment to engage constructively with China to address global challenges, while Kallas called on China to end distortive practices, including restrictions on rare earth exports, which pose significant risks to European companies and endanger the reliability of global supply chains. Furthermore, Kallas highlighted the serious threat Chinese companies' support for Russia's illegal war poses to European security.

EU/UK

NOTABLE HEADLINES

• UK PM Starmer refused to comment on whether Chancellor Reeves will remain in her job and refused to rule out tax increases, although it was reported shortly after that PM Starmer's Press Secretary said Chancellor Reeves has the full support of the PM.
• BoE's Taylor said a soft landing on interest rates is at risk and doesn't think bigger cuts are needed or desirable, while he added that everything has to be taken into consideration and they are not on a pre-set path on rates. Taylor said the UK neutral real rate is to be around 0.75-1.0%, putting the nominal rate around 2.75-3.0% and that in Q1, the reading of the deteriorating outlook suggested that the BoE needed to be on a lower rate path, needing five cuts in 2025 rather than the market-implied quarterly pace of four.
• ECB's Centeno said the ECB remains cautious on the rate path.
• ECB's Rehn said the ECB should be mindful of the risk that inflation stays persistently below 2% target and joint EU borrowing to finance defence could also boost the EUR's role by creating a new safe asset, while Rehn also said Euro appreciation helped the ECB reach 2% inflation target.
• ECB's Wunsch said there is an argument for providing a mildly supportive policy stance and is not uncomfortable with market rate expectations.
• European Commission President von der Leyen is to face a European Parliament vote of no confidence on Thursday, according to officials cited by POLITICO.

DATA RECAP

• EU Unemployment Rate (May) 6.3% vs. Exp. 6.2% (Prev. 6.2%)