US stocks retreated with underperformance in tech as yields remained elevated - Newsquawk Daily Asia-Pac Market Open

• US stocks were pressured on Tuesday, with the Nasdaq leading the downside amid pronounced weakness in Technology as semiconductor and memory names were particularly hard hit as US yields remained elevated. Industrials and Materials also lagged, while Energy, Health Care and Consumer Staples outperformed. The recent backup in long-end yields has been weighing on broader market sentiment, particularly after the 30-year rose to its highest level in around 19 years on Monday. Higher long-term borrowing costs may be reducing the attractiveness of debt-backed financing for hyperscaler capex, potentially weighing on the outlook for AI infrastructure spending and, in turn, demand for semiconductors. Higher yields also present a valuation headwind for growth stocks more broadly. The Vanguard S&P 500 Growth ETF (VOOG) fell over 1%, while the Semiconductor ETF (SOXX) dropped around 5% and the Memory ETF (DRAM) tumbled over 8%. In terms of data, US Import and Export Prices were cooler than expected, adding to the string of softer July inflation reports ahead of the PCE report due later this month. The weekly ADP Employment Change remained subdued at around 9.5k vs the prior week's 8.25k. On housing, starts declined 12%, below expectations, while the more forward-looking Building Permits rose 5%, topping forecasts. Industrial and Manufacturing Production were broadly in line. In the wake of the data, the Atlanta Fed GDPNow estimate for Q3 was revised down to 4.0% from 4.3%.
• USD saw marginal gains on Tuesday, albeit in holiday-thin trade, while there was a deluge of data, but a lack of tier-1 releases and Fed speak. The attention remains on US Treasury yields, which are elevated and continue to weigh on sentiment, with participants now looking ahead to FOMC Minutes.
• Looking ahead, highlights include New Zealand PPI, Japanese Machinery Orders & Australian Wage Price Index.

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LOOKING AHEAD

• Highlights include New Zealand PPI, Japanese Machinery Orders & Australian Wage Price Index.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump posted, "There are no talks or conversations going on, or scheduled, with the Islamic Republic of Iran. The Naval Blockade remains in full force and effect. The Hormuz Strait is open and operating. All water mines have been removed or detonated."
• US President Trump is waiting for Iran to cave to his economic pressure, but Tehran may be willing to wait even longer, according to POLITICO.
• US President Trump and UAE President discussed the region in a phone call.
• US official told Al Jazeera there is no contradiction in the administration's statements regarding negotiations with Iran, saying positive discussions took place with Iran, but Trump decided to wait, while Trump asked his team not to engage in talks with Iran until it is ready to make a deal.
• Semafor's Talcott wrote that a White House official said Trump's Truth Social post, in which he said there are no talks or conversations going on with Iran, means Trump is calling off talks with Iran for the foreseeable future.
• Iranian Foreign Minister Araghchi said Tehran rejected ceasefire proposals and that the war must end, not pause, while he added that the US's goal from the war is Iran's surrender, but Iran will not surrender, and America is begging to negotiate with Iran now "according to our terms".
• Iranian Parliamentary Speaker Ghalibaf said the Strait of Hormuz will not open until the blockade and oil embargo are lifted, while he added that "Iran is ready to inflict a heavier defeat on the enemy than before, in proportion to his actions and encroachments." Ghalibaf also commented that "Americans think squeezing Iran harder will win concessions that were never part of the agreement. Bessent and Hegseth are way out of their league. Stop waiting for the clown crew to pull a rabbit out of their hat and clean up the mess you made."
• Adviser to Iran’s Supreme Leader said Iran remains committed to logic and dialogue but will not equate negotiation with surrender, according to Fars.
• Qatari Foreign Ministry spokesperson said the current effort is focused on defusing the crisis and returning to the memorandum of understanding. Mediators are awaiting a bilateral agreement between Oman and Iran on the Strait of Hormuz before resuming broader US-Iran negotiations, while the invitation remains open for an Iranian delegation to visit on the pilots issue, while Iran should not involve Qatar in its internal problems, according to Al Jazeera.
• UAE's Defence Ministry said it detected two ballistic missiles launched from Iran with one missile falling outside territorial waters and the second falling inside, while it is ready to deal with any threats.
• UAE's Foreign Ministry said all trade, commercial exchanges and financial transactions with Iran have been halted until further notice.
• UKMTO said it received a report of an incident 40nm southeast of Al Mocha, Yemen, where an unmanned cargo vessel was struck by multiple unknown projectiles, causing damage.
• Reports of a large fire in Sulaymaniyah, Iraq, emerged, while unconfirmed reports indicated an energy site in the province had been targeted by an attack.
• Israeli official claimed that the attack on the Syrian air base in the Idlib region was intended to prevent a Turkish military buildup there, according to Axios. However, a Turkish official said in response, "There was no Turkish presence at the air base. Israel is making up excuses to bomb neighboring countries and destabilize the region."
• Saudi enemy artillery reportedly targeted densely populated villages in the Gafera of Al-Thahhar district in Sa'ada, Yemen.

US TRADE

• US stocks were pressured on Tuesday, with the Nasdaq leading the downside amid pronounced weakness in Technology as semiconductor and memory names were particularly hard hit as US yields remained elevated. Industrials and Materials also lagged, while Energy, Health Care and Consumer Staples outperformed. The recent backup in long-end yields has been weighing on broader market sentiment, particularly after the 30-year rose to its highest level in around 19 years on Monday. Higher long-term borrowing costs may be reducing the attractiveness of debt-backed financing for hyperscaler capex, potentially weighing on the outlook for AI infrastructure spending and, in turn, demand for semiconductors. Higher yields also present a valuation headwind for growth stocks more broadly. The Vanguard S&P 500 Growth ETF (VOOG) fell over 1%, while the Semiconductor ETF (SOXX) dropped around 5% and the Memory ETF (DRAM) tumbled over 8%. In terms of data, US Import and Export Prices were cooler than expected, adding to the string of softer July inflation reports ahead of the PCE report due later this month. The weekly ADP Employment Change remained subdued at around 9.5k vs the prior week's 8.25k. On housing, starts declined 12%, below expectations, while the more forward-looking Building Permits rose 5%, topping forecasts. Industrial and Manufacturing Production were broadly in line. In the wake of the data, the Atlanta Fed GDPNow estimate for Q3 was revised down to 4.0% from 4.3%.
• SPX -0.66% at 7,694, NDX -1.68% at 29,491, DJI -0.22% at 53,344, RUT -1.24% at 3,020.
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TARIFFS/TRADE

• White House Official confirmed US President Trump and Canadian PM Carney spoke last night, but stated there was "no resolution that would prompt the US President to hold off on the retaliation tariffs which are set for August 19th", according to Fox's Lawrence.
• A deal between the US and Canada to stave off new tariffs on Canadian goods is now on President Trump's desk, while it is now up to Trump whether the 50% duty goes into effect, as scheduled, at midnight, according to Politico citing sources.
• It was earlier reported that the US is to downplay hopes for a trade deal with Canada on Tuesday, although US President Trump and Canadian PM Carney were expected to speak again on Tuesday, according to people familiar with the matter.
• Canadian negotiators were reportedly looking at accepting a lower level of tariffs on sectors subject to the Section 232 levies in exchange for concessions, according to The Globe and Mail citing sources. Concessions include provinces lifting their US alcohol bans and Ottawa dropping its counter tariffs on autos. The level of tariffs that would apply to autos and lumber remain sticking points, while the US is holding firm to its position on autos, leaving one of the toughest issues to crack for the final dash to a deal, according to sources with knowledge of the talks.

NOTABLE HEADLINES

• White House reportedly plans to host an event with Trump tomorrow that will include various tech leaders, though prediction market companies were not invited and will not be attending, according to Axios citing sources.

DATA RECAP

• US Industrial Production (Jul MM) 0.2% vs. Exp. 0.3% (Prev. 0.3%)
• US Manufacturing Production (Jul MM) 0.2% vs. Exp. 0.2% (Prev. 0.3%)
• US Capacity Utilisation (Jul) 76.3% vs. Exp. 76.3% (Prev. 76.2%)
• US Pending Home Sales (Jul MM) -2.3% vs. Exp. 0.3% (Prev. -4.8%)
• US Pending Home Sales (Jul YY) -2.2% (Prev. -0.3%)
• US Housing Starts (Jul) 1.239 vs. Exp. 1.35 (Prev. 1.427)
• US Building Permits Prel (Jul) 1.443 vs. Exp. 1.37 (Prev. 1.374)
• US Export Prices (Jul MM) -1.3% vs. Exp. 0.2% (Prev. -0.7%)
• US Import Prices (Jul MM) -0.4% vs. Exp. 0.1% (Prev. -0.3%)
• US ADP Employment Change Weekly 9.5K (Prev. 8.25K)

FX

• USD saw marginal gains on Tuesday, albeit in holiday-thin trade, while there was a deluge of data, but a lack of tier-1 releases and Fed speak. The attention remains on US Treasury yields, which are elevated and continue to weigh on sentiment, with participants now looking ahead to FOMC Minutes.
• EUR was choppy in range-bound trade at the 1.1500 handle, with little reaction seen to comments from ECB's Lane, who sees inflation hovering around 3% for the rest of the year, but noted food inflation is relatively low and reiterated uncertainty.
• GBP marginally softened with the currency not helped by disappointing jobs data, including a higher-than-expected Unemployment Rate.
• JPY was slightly softer on the day with indecisive price action seen in USD/JPY, albeit within tight parameters, at the 159.00 handle.

FIXED INCOME

• T-notes settled marginally higher and the curve flattened, although yields remain elevated, while attention shifts to looming FOMC Minutes.

COMMODITIES

• Oil prices saw slight gains on Tuesday and traded within tight parameters in light holiday trade. Middle East headlines were the highlights, and the main market came after the usual punchy Trump rhetoric in which he stated that there are no talks or conversations going on, or scheduled, with Iran, and that the naval blockade remains in full force and effect.
• Russian President Putin said Russia is discussing with Myanmar the construction of oil refineries, production and exploration of hydrocarbons, including on the shelf, while he stated relations between Russia and Myanmar continue to strengthen and gain concrete content. Putin also noted good prospects for organising the export of Russian LNG to Myanmar, including transit supplies, as well as the establishment of cooperation with Myanmar in the field of space and manned spaceflight.
• Russia will reroute Kazakh oil exports from Ust-Luga to Novorossiysk to free up Baltic port capacity for additional Russian crude shipments, according to source reports.

GEOPOLITICAL

RUSSIA-UKRAINE

• Russian Foreign Minister Lavrov said Russia has the right to regard direct involvement of British missile forces in strikes against Russia as participation in the conflict, according to Interfax.

ASIA-PAC

NOTABLE HEADLINES

• Moody's affirmed Australia at Aaa and maintained a stable outlook, while it expects real GDP growth of 1.9% in 2026 and 1.6% in 2027. Furthermore, it noted weak productivity, housing affordability, higher debt and exposure to external shocks as key challenges.

EU/UK

NOTABLE HEADLINES

• ECB's Lane said inflation will hover around 3% for the rest of the year, while he noted food inflation is relatively low and reiterated uncertainty. Lane separately commented that EZ inflation being one percentage point above the ECB's 2% target is a lot.

DATA RECAP

• UK Employment Change (Jun) 83k (Prev. 147k)
• UK Unemployment Rate (Jun) 4.9% vs. Exp. 4.8% (Prev. 4.9%)
• UK Average Earnings excl. Bonus (Jun 3MYr) 3.5% vs. Exp. 3.4% (Prev. 3.4%)
• UK Average Earnings incl. Bonus (Jun 3MYr) 4.1% vs. Exp. 4.1% (Prev. 4.4%)
• German ZEW Current Conditions (Aug) -61.1 vs. Exp. -68.8 (Prev. -77.6)
• German ZEW Economic Sentiment Index (Aug) 34.2 vs. Exp. 30 (Prev. 26.3)
• European ZEW Economic Sentiment Index (Aug) 31.4 vs. Exp. 25.4 (Prev. 23.4)