• Japanese PM Ishiba vowed to stay on despite exit polls from the election showing that the ruling coalition lost its majority.
• APAC stocks began the week mostly in the green, markets in Japan were shut for a holiday.
• EU envoys are set to meet as early as this week to formalise a retaliation plan in the event of a possible no-deal scenario with the US, Bloomberg.
• European equity futures indicate a lower cash market open with Euro Stoxx 50 future down 0.3% after the cash market finished with losses of 0.3% on Friday.
• DXY is a touch lower, JPY outperforms post-election, EUR/USD remains on a 1.16 handle.
• Looking ahead, highlights include Canadian Producer Prices, US Leading Index Change.

SNAPSHOT

US TRADE

EQUITIES

• US stocks were choppy on Friday, with early upside faded amid mixed sectoral performance. Utilities, Consumer Discretionary and Real Estate outperformed, while Energy, Healthcare and Communication lagged. The focus on Friday was largely on commentary from Fed Governor Waller, who reiterated his call for a 25bp rate cut in July. Meanwhile, US data saw strong housing data while the UoM also impressed, coinciding with easing inflation expectations.
• SPX -0.01% at 6,296, NDX -0.07% at 23,065, DJI -0.32% at 44,342, RUT -0.62% at 2,239.
• Click here for a detailed summary.

TARIFFS/TRADE

• US Commerce Secretary Lutnick said he is confident they will get a deal done with the EU, while Lutnick said that President Trump is ‘absolutely’ going to renegotiate the USMCA.
• EU envoys are set to meet as early as this week to formalise a retaliation plan in the event of a possible no-deal scenario with US President Trump, according to Bloomberg.
• US State Department announced visa restrictions on Brazilian judicial officials including Supreme Court Justice Moraes and his allies in court, as well as their immediate family members. It was later reported that Brazilian President Lula said US visa restrictions on Brazilian officials are another arbitrary and baseless move by the US government, while he added that interference by one country in another’s justice system is unacceptable. Furthermore, Lula said this violates the basic principles of respect and sovereignty between nations and no form of intimidation or threat from anyone will undermine Brazil’s powers and institutions' mission to preserve democracy.
• Japanese PM Ishiba said he will tackle US tariff issues before the August 1st deadline and they cannot give up the negotiation bases they’ve built through US tariff talks, while he added that tariff negotiator Akazawa is to visit the US on Monday.
• Japanese tariff negotiator Akazawa said he will visit the US this week and they are making arrangements for ministerial-level tariffs talks with the US to take place this week, while he also noted that he did not discuss tariffs with US Treasury Secretary Bessent on Saturday.
• South Korea's Industry Ministry said US tariff negotiations are in a serious situation and it pledged an all-out effort to smoothly wrap up US tariff talks.
• China's Commerce Ministry commented regarding Chinese firms being sanctioned, stating that the EU's actions have a serious negative impact on China-EU economic and trade relations and financial cooperation, while it will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises and financial institutions.

NOTABLE HEADLINES

• US Treasury Secretary Bessent reportedly advised US President Trump not to fire Fed Chair Powell and noted the Fed is already indicating it will cut rates later this year, while Bessent also warned Trump about economic and market risks over firing Powell, according to WSJ. However, US President Trump later posted “The Wall Street Journal ran a typically untruthful story today by saying that Secretary of the Treasury, Scott Bessent, explained to me that firing Jerome “Too Late” Powell, the Worst Federal Reserve Chairman in History, would be bad for the Market. Nobody had to explain that to me. I know better than anybody what’s good for the Market, and what’s good for the U.S.A. If it weren’t for me, the Market wouldn’t be at Record Highs right now, it probably would have CRASHED! So, get your information CORRECT. People don’t explain to me, I explain to them!”
• US President Trump’s administration reviewed SpaceX’s government contracts following the feud between US President Trump and Elon Musk, although officials determined that most SpaceX contracts were critical to Defense Department and NASA missions, according to WSJ.

APAC TRADE

JAPANESE ELECTION

• Exit polls from Japan’s upper house election showed the ruling coalition is likely to lose its majority in the upper house with the LDP and coalition partner Komeito projected to win a combined 32 to 51 seats out of a total of 125 seats contested, according to NHK.
• Japanese PM Ishiba vowed to stay on despite the exit polls from the election and stated he "solemnly" accepts the "harsh result" but noted his focus was on trade negotiations, according to the BBC. LDP will continue to govern in a coalition with Komeito

EQUITIES

• APAC stocks began the week mostly in the green but with gains capped following relatively light macro catalysts from over the weekend, aside from Japan's upper house election with the ruling coalition set to lose a majority, although markets in Japan were shut for a holiday.
• ASX 200 retreated with the index dragged lower by underperformance in its top-weighted financial sector, while miners were showing some resilience as South32 gained following its quarterly and full-year production update.
• Hang Seng and Shanghai Comp were kept afloat amid strength in tech and energy stocks, while China's LPRs were unsurprisingly maintained and there were also recent reports that US President Trump could meet with Chinese President Xi ahead of or during the October APEC meeting in South Korea.
• US equity futures (ES +0.1%, NQ +0.2%) traded rangebound amid a lack of relevant drivers and as earnings season begins to pick up this week.
• European equity futures indicate a lower cash market open with Euro Stoxx 50 future down 0.3% after the cash market finished with losses of 0.3% on Friday.

FX

• DXY kept within tight parameters following a lack of major fresh catalysts for the US over the weekend and with the Fed on a blackout period.
• EUR/USD lacked direction after last week's failure to reclaim the 1.1700 status and with participants looking ahead to upcoming events later in the week including the ECB policy meeting, Flash PMIs and EU's von der Leyen and Costa to visit China and meet with President Xi, as well as co-chair the 25th China-EU summit.
• GBP/USD just about held above the 1.3400 level, albeit with the upside limited amid quiet catalysts and a drop in UK Rightmove House Prices.
• USD/JPY was pressured at the reopen amid early haven flows after exit polls showed Japanese PM Ishiba suffered a historic defeat on Sunday with the ruling coalition set to lose its majority, which risks political instability and effectively weakens the government's position ahead of trade negotiations with the US.
• Antipodeans were lacklustre with mild headwinds seen in NZD following the softer-than-expected CPI data from New Zealand.

FIXED INCOME

• 10yr UST futures were little changed amid light pertinent catalysts and with overnight cash treasuries trading shut due to the Tokyo holiday closure.
• Bund futures eked mild gains after weathering last week's choppy price action and with attention this week on the ECB and the China-EU summit.

COMMODITIES

• Crude futures were rangebound after last Friday's intraday pullback and with quiet energy-specific newsflow from over the weekend, while Iran also confirmed that nuclear talks with France, Germany and the United Kingdom will be held in Istanbul on Friday.
• Spot gold traded both sides of the USD 3,350/oz level but with upside capped amid an uneventful dollar.
• Copper futures were indecisive and failed to sustain the initial momentum seen as Chinese participants entered the fray.

CRYPTO

• Bitcoin gradually climbed overnight and returned to above the USD 118k level.

NOTABLE ASIA-PAC HEADLINES

• Chinese Loan Prime Rate 1 Year (Jul) 3.00% vs. Exp. 3.00% (Prev. 3.00%)
• Chinese Loan Prime Rate 5 Year (Jul) 3.50% vs. Exp. 3.50% (Prev. 3.50%)
• US President Trump and Chinese President Xi could meet ahead of or during the APEC summit in South Korea.
• Chinese Foreign Ministry said European Commission President von der Leyen and European Council President Costa will visit China on July 24th and will meet with President Xi, while Chinese Premier Li will co-chair the 25th China-EU summit with the EU presidents.

DATA RECAP

• New Zealand CPI QQ (Q2) 0.5% vs. Exp. 0.6% (Prev. 0.9%)
• New Zealand CPI YY (Q2) 2.7% vs. Exp. 2.8% (Prev. 2.5%)
• New Zealand RBNZ Sectoral Factor Model Inflation Index YY (Q2) 2.8% (Prev. 2.9%)

GEOPOLITICS

MIDDLE EAST

• Iran and three European countries reached an agreement to resume nuclear talks, while an Iranian Foreign Ministry spokesperson said Iran and three European powers are to hold nuclear talks in Istanbul on Friday.
• Israel issued an evacuation order for Deir al-Balah in central Gaza as it prepared to extend a Gaza offensive to areas not yet reached by ground forces.
• Israel prepared a plan to control the Gaza Strip as an alternative to the idea of a humanitarian city, with the plan widely accepted among Israeli ministers and will be implemented if the Gaza negotiations fail, according to sources cited by Channel 12.
• Israel’s military said it operated to disperse a violent gathering involving Israeli citizens across the border with Syria.
• Syrian Presidency announced an immediate and comprehensive ceasefire, while it urged all parties to commit to a ceasefire and end all hostilities in all areas immediately. Furthermore, the Syrian Interior Ministry said the city of Sweida was cleared of Bedouin tribes fighters and clashes were halted after Syrian security forces were deployed to enforce a ceasefire.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said a Russian attack damaged critical infrastructure in the Sumy region, while it was separately reported that Zelensky said Kyiv sent Moscow an offer to hold talks next week.
• Russian President Putin met with senior advisers to Iran’s Supreme Leader in the Kremlin, according to RIA.
• Kremlin spokesman said Russian President Putin repeated his desire to bring the Ukrainian settlement to a peaceful conclusion as soon as possible but it is a long and difficult process, while Russia is ready to move fast on Ukraine peace but the main thing is to achieve the goals which have not changed.
• Russian Defence Ministry said Russian forces took control of Bila Gora in eastern Ukraine, according to RIA.

OTHER

• South Korean Unification Ministry spokesperson commented that the government is looking into various plans to improve relations with North Korea, regarding a report of South Korea potentially allowing tourism to North Korea.

EU/UK

NOTABLE HEADLINES

• London Stock Exchange Group (LSEG LN) considers the launch of 24-hour trading, according to FT.
• UK pensions overhaul looms as pension minister Bell warns of a slump in retirement income, while he noted the government would revive the Pensions Commission that heralded sweeping changes under the Blair Labour government in the early 2000s and argued that reforms were only “a job half done”, according to FT.
• EU reportedly cracks down on state meddling in bank M&A as it recently issued warnings last week against meddling by the Italian and Spanish governments in banking tie-ups, according to the FT.
• EU is to force car rental companies to purchase EVs only from 2030, according to Bild.

DATA RECAP

• UK Rightmove House Prices MM (Jul) -1.2% (Prev. -0.3%)
• UK Rightmove House Prices YY (Jul) 0.1% (Prev. 0.8%)