TL;DR

U.S. nears 15% tariff deals with EU/Japan; SK Hynix, Nikkei, S&P 500 hit records; China lithium surges.

Highlights

• Trump threatens 15–50% tariffs on countries without U.S. trade deals by Aug. 1; only a few countries have secured agreements so far 1.
• U.S. and EU near a 15% tariff deal with exemptions for aircraft, spirits, and medical devices; European auto tariffs to be cut 2.
• Trump announces $550B Japan trade pact, lowering auto tariffs and prompting record highs in Nikkei and S&P 500 3.
• ECB holds deposit rate at 2%, pausing its easing cycle as trade uncertainty persists; markets still price in one more cut 7.
• EU prepares €93B in retaliatory tariffs on U.S. goods if no deal is reached; measures could start as soon as Aug. 7 8.
• U.S. to lift Nvidia H20 export curbs in exchange for Chinese rare-earth magnets; $1B in Nvidia chips reportedly circumvented U.S. export restrictions to China 45.
• SK Hynix posts record profit on AI memory demand; South Korea’s Q2 GDP beats forecasts on strong semiconductor exports 1317.
• China’s lithium futures hit five-month highs on rumors of production suspensions and draft price law tightening 11.
• Honda delays hydrogen plant; Fortescue cancels green hydrogen projects, reflecting weaker global hydrogen demand and high costs 12.
• Tether plans U.S. re-entry as new stablecoin law takes effect, targeting institutional payments 15.
• Thailand-Cambodia border clashes escalate, causing evacuations and diplomatic downgrades; regional risk rises 9.
• China-EU summit ends without breakthroughs amid trade deficit, EV subsidy, and rare-earth tensions 6.

Commentary

Trade policy remains the primary market driver as the U.S. sets an Aug. 1 deadline for new tariffs on nations without bilateral deals 1. The U.S.-Japan agreement and progress with the EU have eased some market concerns, with equity indices in Japan, Europe, and the U.S. rallying on expectations of lower tariffs than initially feared 23. However, the risk of last-minute breakdowns or escalation persists, with the EU preparing significant retaliatory measures 8 and the ECB pausing its easing cycle to assess the fallout 7.

In Asia, strong semiconductor demand is supporting both corporate earnings and macro data. SK Hynix’s record profit and South Korea’s better-than-expected Q2 GDP highlight the sector’s momentum 1317, though ongoing U.S.-China tech tensions—evidenced by both the chips-for-magnets swap and reports of Nvidia chips reaching China despite curbs—keep supply chain risks elevated 45. Meanwhile, China’s lithium futures surged on supply rumors and draft regulatory changes, reinforcing commodity price volatility 11.

The energy transition narrative is under pressure as Honda delays its hydrogen plant and Fortescue cancels projects, reflecting persistent cost and demand challenges for green hydrogen 12. This suggests continued reliance on traditional energy sources in the near term.

Crypto markets may see increased institutional activity as Tether prepares to re-enter the U.S. under new regulatory clarity 15. Regional risk is also in focus with escalating Thailand-Cambodia border tensions 9 and a lack of progress in China-EU trade talks 6, both of which could affect sentiment in EM and regional assets.