• APAC stocks gained heading into month-end as participants digested a slew of data releases and the BoJ policy decision.
• BoJ hiked rates by 15bps and is to taper monthly bond purchases by JPY 400bln per quarter.
• Chinese manufacturing PMI remained in contractionary territory, core Australian CPI measures came in below expectations.
• European equity futures indicate a mildly higher open with Euro Stoxx 50 future up 0.1% after the cash market finished with gains of 0.5% on Tuesday.
• AUD the laggard post-CPI data and JPY flat vs. the USD after some volatile price action. DXY is a touch softer.
• Looking ahead, highlights include German Trade & Unemployment Rate, French CPI, EZ Flash HICP, US ADP & Chicago PMI, FOMC & BCB Policy Announcements, Fed Chair Powell's Press Conference, Supply from Germany & US Quarterly Refunding Announcement.
• Earnings from HSBC, Taylor Wimpey, GSK, Lufthansa, Fresenius SE, Siemens Healthineers, Adidas, Schneider Electric, Danone, Safran, Telefonica, BBVA, Telecom Italia, ADP, Boeing, Mastercard, ARM, Meta, Qualcomm & T-Mobile US.

US TRADE

EQUITIES

• US stocks finished mixed with price action choppy heading into the upcoming risk events and as selling pressures emerged after JOLTS came in above expectations with the prior revised higher and Consumer Confidence also beat expectations, while markets also reflected on the heightened geopolitical tensions after Israel retaliated to the Golan Heights strike in which it targeted a top Hezbollah commander in a Beirut suburb. As such, the major indices were varied and the Nasdaq underperformed as the tech sector was pressured heading into more of the Magnificent Seven earnings.
• SPX -0.50% at 5,436, NDX -1.40% at 18,796, DJIA +0.50% at 40,743, RUT +0.40% 2,243.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US VP Harris is expected to announce her VP pick as soon as Monday, according to sources cited by Reuters. It was also reported that Harris will hold her first rally with her running mate next Tuesday in Philadelphia, according to Politico.
• US VP Harris wiped out Republican Presidential Candidate Trump's swing-state lead in the latest election poll, according to Bloomberg. Furthermore, the poll showed Harris gained ground versus Trump in each of the seven swing states since Biden dropped out of the race.
• Microsoft Corp (MSFT) Q4 2024 (USD): EPS 2.95 (exp. 2.93), Revenue 64.73bln (exp. 64.39bln), Intelligent Cloud rev. 28.52bln (exp. 28.72bln). Co. shares were lower by 2.7% after-hours
• Advanced Micro Devices Inc (AMD) Q2 2024 (USD): Adj. EPS 0.69 (exp. 0.68), Revenue 5.84bln (exp. 5.72bln). Co. shares were higher by +7.6% after-hours

APAC TRADE

BOJ

• BoJ raised its short-term interest rate by 15bps to 0.25% and announced a change in bond purchases in which it will no longer provide a range but will instead specify amounts, while the BoJ is to reduce scheduled monthly bond buying by around JPY 400bln each quarter and with bond purchases to be JPY 3tln a month as of Q1 2026. BoJ said the decision on rates was made by a 7-2 vote with Nakamura and Noguchi the dissenters, while the decision on bond buying made unanimously. Furthermore, it stated that it may modify the bond-taper plan upon mid-term view as appropriate, if deemed necessary for functioning of JGB market, and at the June 2025 meeting, the BoJ will discuss the guideline for its JGB buying from April 2026 and announce results.

EQUITIES

• APAC stocks gained heading into month-end as participants digested a slew of data releases and the BoJ policy decision.
• ASX 200 was led by strength in energy and tech, while domestic yields were pressured after mostly softer inflation data.
• Nikkei 225 declined heading into the BoJ policy decision after rate hike bets were boosted following several local press reports that the central bank is to consider a 15bps rate increase and although the hike materialised, the Bank's taper plan was less aggressive than many had called for.
• Hang Seng and Shanghai Comp. gained as participants digested the latest Chinese PMI data in which headline Manufacturing PMI topped forecasts despite remaining in contraction territory, while Non-Manufacturing PMI matched estimates.
• US equity futures (ES +0.4%, NQ +0.9%) gradually rebounded from the initial pressure seen following mixed earnings results.
• European equity futures indicate a mildly higher open with Euro Stoxx 50 future up 0.1% after the cash market finished with gains of 0.5% on Tuesday.

FX

• DXY traded rangebound amid mixed performances in its major peers and as the attention now turns to the FOMC.
• EUR/USD eked marginal gains following yesterday's rebound from support at the 1.0800 level.
• GBP/USD was uneventful after its recent choppy performance ahead of Thursday's BoE meeting.
• USD/JPY saw volatile trade following the BoJ announcement to hike rates by 15bps and taper monthly bond purchases by JPY 400bln per quarter.
• Antipodeans were mixed with AUD/USD pressured after the latest inflation data in which the headline figures matched estimates but the subcomponents of the releases, including the RBA's preferred trimmed-mean CPI, printed softer-than-expected which reduces the prospects of a hike next week.
• PBoC set USD/CNY mid-point at 7.1346 vs exp. 7.2419 (prev. 7.1364).

FIXED INCOME

• 10-year UST futures traded little changed and took a breather following recent bull steepening and as participants await the FOMC and QRA.
• Bund futures held on to recent gains after mixed data releases and with German jobs data also due later.
• 10-year JGB futures were heavily pressured amid heading to the BoJ announcement amid increased rate hike bets after several Japanese press reports noted the central bank is to consider a 15bps hike during today's meeting, while the rate increase eventually materialised although the taper announced was less aggressive than some were calling for with a reduction of JPY 400bln each quarter.

COMMODITIES

• Crude futures gradually edged higher after bullish private inventory data and heightened geopolitical tensions after Israel conducted an air strike which killed Hamas chief Haniyeh in Tehran.
• US Private Inventory (bbls): Crude -4.5mln (exp. -1.1mln), Distillate -0.3mln (exp. -1.2mln), Gasoline -1.9mln (exp. -1mln), Cushing -0.9mln.
• US reportedly mulls fresh sanctions on Venezuela if President Maduro fails to comply with Washington's demands for greater transparency on the vote count, according to Reuters citing sources, while sanction options include individual sanctions or US travel bans on Venezuelan officials and measures could later escalate to other types of sanctions if deemed necessary.
• Spot gold mildly continued on advances following its recent return to above USD 2,400/oz ahead of major central bank decisions.
• Copper futures extended on the prior day's rebound with upside facilitated by better-than-expected Chinese Manufacturing PMI data.

CRYPTO

• Bitcoin traded indecisively and just about retained the USD 66,000 status.

NOTABLE ASIA-PAC HEADLINES

• Chinese Vice Finance Minister said will strengthen fiscal policy adjustments and deepen fiscal and tax reforms, while they will steadily implement consumption tax reform in a step-by-step way and standardise the management of local governments' non-tax revenues. Furthermore, China will step up fiscal policy implementation to promote economic recovery.
• A notice was sent to US House staff announcing that in two weeks all ByteDance products including TikTok will be banned from House-managed devices and app stores, according to Punchbowl's Cohen.

DATA RECAP

• Chinese Manufacturing PMI (Jul) 49.4 vs Exp. 49.3 (Prev. 49.5)
• Chinese Non-Manufacturing PMI (Jul) 50.2 vs Exp. 50.2 (Prev. 50.5)
• Chinese Composite PMI (Jul) 50.2 (Prev. 50.5)
• Australian Weighted CPI YY (Jun) 3.8% vs. Exp. 3.8% (Prev. 4.0%)
• Australian CPI QQ (Q2) 1.0% vs. Exp. 1.0% (Prev. 1.0%)
• Australian CPI YY (Q2) 3.8% vs. Exp. 3.8% (Prev. 3.6%)
• Australian RBA Trimmed Mean CPI QQ (Q2) 0.8% vs. Exp. 1.0% (Prev. 1.0%)
• Australian RBA Trimmed Mean CPI YY (Q2) 3.9% vs. Exp. 4.0% (Prev. 4.0%)
• Australian RBA Weighted Median CPI QQ (Q2) 0.8% vs. Exp. 1.0% (Prev. 1.1%)
• Australian RBA Weighted Median CPI YY (Q2) 4.1% vs. Exp. 4.3% (Prev. 4.4%)
• New Zealand ANZ Business Outlook (Jul) 27.1% (Prev. 6.1%)
• New Zealand ANZ Own Activity (Jul) 16.3% (Prev. 12.2%)

GEOPOLITICAL

MIDDLE EAST

• Hamas stated that its political bureau chief Haniyeh was killed in Iran by an Israeli air strike on his house in Tehran, while a Hamas official said the assassination is a cowardly act that will not go unpunished, according to Al-Aqsa TV. It was also reported that Iran said it is investigating the assassination of Haniyeh with the results to be published soon, according to Tasnim.
• Israeli military carried out a strike in Beirut in retaliation for the attack on Golan Heights and targeted the commander responsible for the attack.
• Israeli official said they estimate the target of the Beirut suburb attack has been eliminated and confirmation takes time, according to Al Arabiya. Israel's military also said Hezbollah senior commander Faud Shukr was killed in the Israeli strike, while it added that he was Hezbollah Secretary-General Nasrallah's 'right-hand man' and the most senior military commander, although two security sources cited by Reuters claimed the top Hezbollah commander had survived.
• Lebanon’s Foreign Minister said Lebanon condemned the Israeli strike and plans to file a complaint to the United Nations, while the official hopes for a proportionate response by Hezbollah 'so that this wave of killing will stop'.
• UN special coordinator for Lebanon said they are deeply concerned about Israel's strike in a densely populated southern suburb of Beirut which resulted in multiple civilian casualties, while they underscored there is no such thing as a military solution and called for diplomacy to end hostilities.
• Lebanese army reportedly deployed at the attack site in the southern Beirut suburb, according to Al Arabiya.
• Hamas strongly condemned the attack on Lebanon's southern suburb and called it a "dangerous escalation".
• Iran strongly condemned "sinful and cowardly" Israeli aggression that targeted the southern Beirut suburb, according to Iran's Embassy in Lebanon.
• Russia said that strikes on Lebanon are a flagrant violation of international law, according to TASS.
• Israeli office said they are not looking to start a regional war, according to N12 TV.
• White House said the US does not believe war between Hezbollah and Israel is inevitable.
• US warships are reportedly on their way to the Lebanese coast, according to Sky News Arabia citing Israel's Channel 13.
• Explosions were reported inside an Iraqi PMF base south of Baghdad causing casualties, according to Reuters sources, while the US later carried out a self-defence strike in Iraq because of a threat to coalition forces, according to an official cited by Reuters

OTHER

• Russian Foreign Ministry spokeswoman said any basis for dialogue with US arms control can come only after Washington refuses confrontation with Russia, according to RIA.