• US President Trump said they are going to be putting a very large tariff on chips and semiconductors, which will be at approximately 100%, but added "if you're building in the US, there will be no charge."
• Crude futures declined yesterday amid Russia/Ukraine optimism following the discussion between the US and Russia which was said to have made progress and with President Trump intending to meet Russian President Putin as soon as next week.
• US President Trump said, regarding the Fed pick, that the interview process has started and it is probably down to three candidates, while he added that the two Kevins are very good, and a temporary governor is to be named in the next few days.
• APAC stocks traded mixed as reciprocal tariffs took effect overnight; European equity futures indicate a marginally higher cash market open with Euro Stoxx 50 futures up 0.4% after the cash market closed with gains of 0.3% on Wednesday.
• Looking ahead, highlights include German Trade (Jun), Industrial Output (Jun), Swedish CPIF (Jul), French Trade Balance (Jun), US Jobless Claims, Wholesale Sales (Jun) NY Fed SCE, Atalanta Fed GDP, BoE Announcement, MPR & DMP, CNB & Banxico Announcements, Speakers including BoE's Bailey & Fed’s Bostic, Supply from Spain, France & US.
• Earnings from Trade Desk, Eli Lilly, ConocoPhillips, Vistra Energy, Peloton, Warner Bros, DataDog, Kenvue, Siemens, Deutsche Telekom, Allianz, Merck, Henkel, Rheinmetall, Deliveroo, Serco, Maersk, Zurich Insurance & WPP.

SNAPSHOT

• Click for the Newsquawk Week Ahead.

US TRADE

EQUITIES

• US stocks were bid with a focus on US earnings this week and as the upside was led by the heavy-cap stocks, with Consumer Discretionary heavily outperforming and Health Care lagging. Tech saw gains too despite a weak AMD report after-hours on Tuesday, while there were no key data releases on Wednesday.
• That being said, several Fed speakers were on the wires including Kashkari who said two rate cuts this year still seem appropriate, but if inflation rises due to tariffs, the Fed could pause, or even hike. Furthermore, Cook said the July jobs data was concerning, and big revisions can happen at economic turning points, while attention was also on geopolitics with 'great progress' said to be made after US Special Envoy Witkoff's meeting with Russian President Putin which paved the way for a potential Trump-Putin meeting as soon as next week.
• SPX +0.73% at, 6,345, NDX +1.29% at 23,315, DJI +0.19% at 44,194, RUT -0.20% at 2,221.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said they are going to be putting a very large tariff on chips and semiconductors, which will be at approximately 100%, but added "if you're building in the US, there will be no charge."
• US President Trump posted late on Wednesday that "RECIPROCAL TARIFFS TAKE EFFECT AT MIDNIGHT TONIGHT! BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA."
• US official said the 15% tariff will stack on top of pre-existing tariff rates applied to imports from Japan, unlike in the case of the European Union, according to Kyodo.
• EU will likely have to wait a few more days for an Executive Order by US President Trump lowering tariffs on imports of European cars and car parts, according to Reuters citing sources.
• Brazilian President Lula said he has not called the White House because US President Trump shows no interest in negotiating on trade, while Lula commented "I'm not going to humiliate myself" and Brazil is not announcing a new tariff against US goods.
• South Korea claimed Samsung Electronics (005930 KS) and SK Hynix (000660 KS) will not be subject to 100% US tariffs, while Taiwan said TSMC (2330 TT) is exempt from US President Trump's 100% chip tariff.

NOTABLE HEADLINES

• Fed's Cook (voter) said July jobs data was concerning and that big revisions can happen at economic turning points, while she added they must be cautious and humble when looking at data. Furthermore, she said policymakers must understand that uncertainty has a financial stability component.
• Fed's Collins (2025 voter) said it is key to understand how uncertainty impacts the economy and that uncertainty is notable in areas where long-term investment is happening, while she added they must look at data holistically to measure uncertainty levels and noted that uncertainty can even speed up some types of economic activity.
• Fed's Daly (2027 voter) said there's cautiousness which is tempering growth but not stalling out, while she commented that they will likely need to adjust policy in the coming months and can't wait for perfect clarity to act. Daly also commented that tariffs are unlikely to boost inflation persistently in a way that monetary policy would need to offset. She also noted that the labour market has softened and additional slowing would be unwelcome. Furthermore, Daly said they need to recalibrate monetary policy to match risks to the Fed’s goals.
• US President Trump said, regarding the Fed pick, that the interview process has started and it is probably down to three candidates, while he added that the two Kevins are very good, and a temporary governor is to be named in the next few days.
• US President Trump confirmed that Apple (AAPL) is to invest USD 600bln into the US and said Apple is to manufacture chips in Texas, Utah, Arizona and New York.
• US President Trump is scheduled to sign executive orders on Thursday at 12:00EDT/17:00BST.

APAC TRADE

EQUITIES

• APAC stocks traded mixed as reciprocal tariffs took effect overnight and following the latest tariff threat from US President Trump who plans to impose 'approximately 100%' tariffs on chips and semiconductors unless manufacturers build in the US.
• ASX 200 pulled back from record highs despite the surprise growth of imports from Australia's largest trading partner.
• Nikkei 225 pared initial losses and briefly reclaimed 41,000 amid a busy slate of earnings and as markets shrugged off comments from a US official that the US will not exempt Japan from stacking 15% tariffs on top of existing levies.
• Hang Seng and Shanghai Comp ultimately kept afloat after the latest Chinese trade data which showed stronger-than-expected exports and surprise growth in the nation's imports.
• US equity futures (ES +0.2%, NQ +0.2%) retained yesterday's gains amid Apple's USD 600bln investment plans and optimism on US-Russia talks.
• European equity futures indicate a marginally higher cash market open with Euro Stoxx 50 futures up 0.4% after the cash market closed with gains of 0.3% on Wednesday.

FX

• DXY traded little changed which provided some mild respite from yesterday's renewed selling pressure despite newsflow having little bearing on USD moves, while key updates were on topics of trade, geopolitics, and the Fed, with US President Trump doubling tariffs on India to 50% and threatening a 100% tariff on semiconductors. Furthermore, reports emerged that Trump advisers are to push for a temporary Fed governor to fill Kugler's seat which would allow more time to decide on a Fed Chair, while comments from Fed officials saw a muted reaction including from Daly who stated they will likely need to adjust policy in the coming months and can't wait for perfect clarity to act.
• EUR/USD benefited from the recent pressure on the dollar and after a rebound in Eurozone Retail Sales.
• GBP/USD held on to this week's spoils but with further upside contained ahead of a widely expected BoE rate cut later today.
• USD/JPY kept afloat after rebounding from support at 147.00 and amid recent widening of US-Japan yield differentials.
• Antipodeans notched mild gains seen after encouraging Chinese trade data which showed a surprise growth in Imports.
• PBoC set USD/CNY mid-point at 7.1345 vs exp. 7.1709 (Prev. 7.1409)

FIXED INCOME

• 10yr UST futures struggled for direction after the prior day's choppy performance and curve steepening with focus on Kugler's replacement and supply this week, while a fat finger hit the curve on Wednesday but then pared the entire move shortly after.
• Bund futures lacked demand and just about held above the 130.00 level as German industrial production and trade data loom.
• 10yr JGB futures rebounded from yesterday's trough but with further upside capped by a lack of tier-1 data from Japan and amid mostly weaker metrics from the 30yr JGB auction.

COMMODITIES

• Crude futures nursed losses after declining yesterday amid Russia/Ukraine optimism following the discussion between the US and Russia which was said to have made progress and with President Trump intending to meet Russian President Putin as soon as next week.
• Spot gold marginally gained after recent dollar weakness and as reciprocal tariffs took effect.
• Copper futures were rangebound amid the mixed risk appetite and encouraging Chinese trade data.

CRYPTO

• Bitcoin saw two-way price action and ultimately retreated after failing to sustain a brief return above the USD 115k level.

NOTABLE ASIA-PAC HEADLINES

• BoK Governor Rhee said the US trade deal takes a huge burden off monetary policy at the August meeting.

DATA RECAP

• Chinese Trade Balance (USD)(Jul) 98.2B vs. Exp. 105.0B (Prev. 114.8B)
• Chinese Exports YY (USD)(Jul) 7.2% vs. Exp. 5.4% (Prev. 5.8%)
• Chinese Imports YY (USD)(Jul) 4.1% vs. Exp. -1.0% (Prev. 1.1%)
• Chinese Trade Balance (CNY)(Jul) 705.1B (Prev. 826.0B)
• Chinese Exports YY (CNY)(Jul) 8.0% (Prev. 7.2%)
• Chinese Imports YY (CNY)(Jul) 4.8% (Prev. 2.3%)
• Australian Balance on Goods (Jun) 5,365M vs. Exp. 3,400M (Prev. 2,238M)
• Australian Goods/Services Exports (Jun) 6.0% (Prev. -2.7%)
• Australian Goods/Services Imports (Jun) -3.1% (Prev. 3.8%)
• New Zealand Inflation Forecast 1 Yr (Q3) 2.37% (Prev. 2.41%)
• New Zealand Inflation Forecast 2 yrs (Q3) Q1 2.28% (Prev. 2.29%)

GEOPOLITICS

MIDDLE EAST

• Israeli PM Netanyahu reportedly has the required majority in the Council to pass the decision to occupy Gaza.

RUSSIA-UKRAINE

• US President Trump said Special Envoy Witkoff had a highly productive meeting with Russian President Putin, "great progress was made!".
• US President Trump told European leaders he intends to meet with Russia's President Putin and Ukraine's PM Zelensky, with Trump intending to meet in person with Putin as soon as next week, according to NYT.
• US President Trump said they had very good talks with Russian President Putin and there's a good chance that there will be a meeting very soon, while he also commented that more secondary sanctions are coming regarding Russia.
• White House said the meeting with Russia and Special Envoy Witkoff went well, while it added that Russia is eager to continue engaging with the US and secondary sanctions on Russia are expected to be implemented on Friday.
• US Secretary of State Rubio said it was a good day regarding efforts to end the Ukraine war but there is still a lot of work ahead and many impediments to overcome. Rubio said there are some concrete examples of the kinds of things Russia would ask for to end the war for the first time since January 20th and they are not at a stage yet where Trump has to make a decision on Russia sanctions, while Trump could talk with Putin over the next couple of days although there is no Trump-Putin call scheduled right now. Furthermore, he said President Trump will make a decision in the next 24–36 hours on whether to impose secondary sanctions on Russia on Friday and Rubio stated he doesn't know if a meeting between Trump and Putin will take place next week which depends on how much progress the sides can make.
• Ukrainian President Zelensky said he discussed Witkoff's visit to Moscow in a call with Trump and said that Russia should end this war, while he also commented that pressure on Russia is working and it's crucial they do not deceive them, as well as commented that it looks like Russia is more inclined to a ceasefire.

OTHER

• South Korean military said South Korea and the US are to conduct major joint military exercises beginning on August 18th although an official stated that some parts of the joint drills are postponed to September, while the military drills will test an upgraded response to a heightened North Korea nuclear threat.