US stocks were mostly lower after an acceleration in US CPI - Newsquawk Asia-Pac Market Open

• US stocks finished mixed albeit with the major indices mostly in the red in the aftermath of the June CPI report which was varied and initially sparked a dovish reaction, although once the internals of the report were digested, like the 0.7% rise in core goods, it showed the start of the pricing impact from tariffs and ultimately pressured stocks and T-notes. As such, there was notable underperformance in the small-cap Russell 2000 (-1.9%) although chip names kept the Nasdaq afloat after reports related to export licences for NVIDIA (NVDA) and AMD (AMD) to sell H20 and MI308 chips to China, while attention was also on the start of earnings season and big banks largely finished the session lower despite profit beats, as some NII and expense metrics disappointed.
• USD strengthened as the dust settled following the latest US CPI report which printed mixed including softer-than-expected Core readings although the data showed an acceleration from the previous including a rise of 0.7% in core goods and ultimately resulted in a hawkish reaction.
• Looking ahead, highlights include South Korean Unemployment Rate & Reuters Monthly Tankan for Japan, Supply from Australia.

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LOOKING AHEAD

• Highlights include South Korean Unemployment Rate & Reuters Monthly Tankan for Japan, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks finished mixed albeit with the major indices mostly in the red in the aftermath of the June CPI report which was varied and initially sparked a dovish reaction, although once the internals of the report were digested, like the 0.7% rise in core goods, it showed the start of the pricing impact from tariffs and ultimately pressured stocks and T-notes. As such, there was notable underperformance in the small-cap Russell 2000 (-1.9%) although chip names kept the Nasdaq afloat after reports related to export licences for NVIDIA (NVDA) and AMD (AMD) to sell H20 and MI308 chips to China, while attention was also on the start of earnings season and big banks largely finished the session lower despite profit beats, as some NII and expense metrics disappointed.
• SPX -0.41% at 6,243, NDX +0.13% at 22,885, DJI -0.98% at 44,023, RUT -1.92% at 2,206.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said a great deal for everybody was just made with Indonesia with Indonesia to pay 19%, while the US will pay nothing and similar deals are in the works. Trump later posted that "Indonesia has committed to purchasing $15 Billion Dollars in U.S. Energy, $4.5 Billion Dollars in American Agricultural Products, and 50 Boeing Jets, many of them 777’s."
• US President Trump said they are making progress with the EU but already have the letter.
• US President Trump expects to meet UK PM Starmer in Scotland and refine the trade deal.
• US Commerce Secretary Lutnick said China chip sales were part of the rare earth magnets agreements and that they're selling China their fourth-best chips, while he said they're not charging tariffs on raw steel, just the finished item, according to CNBC.
• AMD (AMD) is to resume MI308 chip shipments to China once the license clears with the US Commerce Department reviewing licenses to export MI308 chips to China.
• EU spokesperson said Trade Commissioner Sefcovic will talk with USTR Greer in the early evening.
• Mexico’s President Sheinbaum said Mexico will announce other measures if an agreement with the US on new tariffs is not reached by August 1st.

NOTABLE HEADLINES

• Fed's Collins (2025 voter) said a solid economy gives the Fed time to decide its next interest rate move and it is challenging to set monetary policy right now amid uncertainty, while she said it is time for the Fed to be 'actively patient' with monetary policy.
• Fed's Barkin (2027 voter) said more price pressures are coming from tariffs.
• US President Trump posted that the "Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!!". Trump also commented that consumer prices are low and "Bring down the Fed Rate, NOW!!!".
• US President Trump posted on Truth "The House will soon vote on a tremendous Bill to Make America the undisputed, number one leader in Digital Assets".
• Punchbowl's Sherman said House Republicans failed to clear a procedural motion that would allow consideration of a pair of crypto bills and the defence spending bill, although Fox was told they will attempt a re-vote on the rule for the crypto bills around 17:00 EDT.
• US Treasury Secretary Bessent said he wouldn't put too much emphasis on one inflation number and it is important to look at the trend, while he added that inflation is not accelerating.

DATA RECAP

• US CPI MM, SA (Jun) 0.3% vs. Exp. 0.3% (Prev. 0.1%)
• US CPI YY, NSA (Jun) 2.7% vs. Exp. 2.6% (Prev. 2.4%)
• US Core CPI MM, SA (Jun) 0.2% vs. Exp. 0.3% (Prev. 0.1%)
• US Core CPI YY, NSA (Jun) 2.9% vs. Exp. 3.0% (Prev. 2.8%)
• US Real Weekly Earnings MM (Jun) -0.4% (Prev. 0.3%)
• US NY Fed Manufacturing (Jul) 5.5 vs. Exp. -9.0 (Prev. -16.0)

FX

• USD strengthened as the dust settled following the latest US CPI report which printed mixed including softer-than-expected Core readings although the data showed an acceleration from the previous including a rise of 0.7% in core goods and ultimately resulted in a hawkish reaction.
• EUR was pressured and tested the 1.1600 level to the downside amid the dollar strength and with the single currency not helped by political headwinds in France concerning PM Bayrou's budget efforts.
• GBP extended its declines to sub-1.3400 territory with little reaction seen from the Mansion House texts, while participants await UK CPI data.
• JPY continued to weaken with USD/JPY briefly reclaiming the 149.00 status as the dollar climbed on the US inflation data.
• Canadian CPI Inflation MM (Jun) 0.1% vs. Exp. 0.1% (Prev. 0.6%)
• Canadian CPI Inflation YY (Jun) 1.9% vs. Exp. 1.9% (Prev. 1.7%)

FIXED INCOME

• T-notes were hit as the latest CPI report showed the impact of tariff inflation.

COMMODITIES

• Oil prices settled mildly lower following a choppy session as energy-specific newsflow centred around geopolitics and with markets focused on CPI data.
• OPEC MOMR noted the 2025 and 2026 global oil demand growth forecasts remained at 1.3mln BPD Y/Y each, while the 2025 supply growth forecast was kept at 0.8mln BPD.
• Explosion at the Sarsang oilfield (80k BPD) in Iraq halted production, while Iraq's Kurdistan Ministry of Natural Resources said the explosion was caused by a drone attack.

GEOPOLITICAL

MIDDLE EAST

• Israel’s PM and Defence Ministry said they have instructed the military to immediately strike Syrian forces and weaponry that were brought into Sweida.

RUSSIA-UKRAINE

• US President Trump reportedly asked Ukrainian President Zelensky if Ukraine could hit Moscow in the scenario that the US provided long-range weapons in a call that took place on July 4th and Zelensky replied "Absolutely. We can if you give us the weapons", according to FT citing sources. However, the White House clarified that the FT article about a call between US President Trump and Ukrainian President Zelensky misinterpreted President Trump who was "merely asking" a question.
• US President Trump said it is "too bad" if there is no deal with Russia in 50 days and that Ukrainian President Zelensky should not target Moscow. Trump also said he is on nobody's side and wants to stop the killing, while he added they are going to see what happens with Russian President Putin.
• EU's Kallas said they are "really sad" the EU did not approve the new Russia sanctions today and the ball is in Slovakia's court, while he welcomes US President Trump's announcement to send more weapons to Ukraine, although they would like to see the US share the burden. Kallas said he is still hopeful the EU will reach a deal on an 18th Russia sanctions package tomorrow and stated that foreign ministers are to discuss Russian frozen assets in an informal meeting at the end of August.
• Russian Foreign Minister Lavrov said regarding US President Trump's statement about Ukraine that they want to understand what the US President is moved by and has no doubt they will cope with new sanctions.

ASIA-PAC

NOTABLE HEADLINES

• Chinese Premier Li said in a meeting with Australian PM Albanese that China and Australia have vast space for cooperation in energy, minerals and agriculture.
• China’s Commerce Ministry announced revisions to its export control catalogue and revised procedures for handling Gallium metal extraction tech, while it added battery cathode material prep tech to its control list.

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey said multilateral institutions are essential for good policymaking and they are following financial stability risks closely, while he noted countries with big deficits typically come under most financial market pressure and he is yet to be convinced about the need for a retail CBDC.
• BoE's Mann said inflation is still a challenge and it is important to use policy to get inflation back to the 2% target.
• UK Chancellor Reeves said under new reforms, banks will send investment opportunities to savers with cash sitting in low-interest accounts for the first time. Reeves also stated that the government will allow long-term asset funds to be held in stocks and shares ISAs next year and will continue to consider reforms to ISAs and savings to achieve a good balance between cash and investment.
• ECB's Nagel said a steady hand is needed on ECB rates, according to Handelsblatt.
• EU approves Germany’s multi-year fiscal plan, according to Politico.
• French PM Bayrou said regarding the debt situation, that they must not forget what occurred with Greece and interest payments (on debt) could hit EUR 100bln by 2029 if no action is taken. Bayrou said the 2026 budget effort will be worth nearly EUR 44bln (exp. around 40bln), while he said they intend to get the deficit to GDP ratio down to 5.4% in 2025 via the new debt-cutting plan, and to 2.8% in 2029 which is in line with existing commitments. Furthermore, Bayrou said 33% of civil servants who retire will not be replaced and welfare benefits and income tax brackets will not be adjusted for inflation in 2026, while he added they will call on taxpayers who can make a bigger effort to do so by limiting certain tax breaks and additional tax measures will target the highest earners with anti-optimisation measures.
• France's Marine Le Pen warned that if French PM Bayrou does not revise his public spending plan they "will seek to topple him". It was also reported that French hard-left lawmaker Coquerel said lawmakers will not vote for PM's public finance plan and will act to oust the government if it seeks to ram it through parliament without a vote.

DATA RECAP

• EU ZEW Survey Expectations (Jul) 36.1 (Prev. 35.3)
• EU Industrial Production MM (May) 1.7% vs. Exp. 0.9% (Prev. -2.4%, Rev. -2.2%)
• EU Industrial Production YY (May) 3.7% vs. Exp. 2.4% (Prev. 0.8%, Rev. 0.2%)
• German ZEW Economic Sentiment (Jul) 52.7 vs. Exp. 50.3 (Prev. 47.5)
• German ZEW Current Conditions (Jul) -59.5 vs. Exp. -66.0 (Prev. -72.0)