Morning Wrap (12.08.2025)

Gains were seen mainly in Chinese indices thanks to a 90-day extension of trade negotiations with the U.S. Australian and Japanese indices also rose, while equity markets in Singapore and Vietnam declined.

In the currency market, moves were limited, with the U.S. dollar edging slightly lower ahead of CPI data later Today and after Monday’s gains.

The U.S. and China agreed to extend the tariff truce by 90 days, delaying triple tariff rates and mutual trade restrictions until November 10. China’s Ministry of Commerce also postponed adding U.S. companies to its restriction list. The decision supported Asian stock markets.

The Reserve Bank of Australia cut the cash rate by 25 bps to 3.60% from 3.85%, citing easing inflation, a slight weakening in the labor market, and gradual recovery in private demand. Policymakers stated that future moves will depend on labor market data, with the next key report due Thursday. The cut was fully priced in, and AUDUSD held near 0.6500.

Beijing announced that on August 13 it will unveil new subsidized loan programs to boost household consumption and support the services sector. These measures respond to weak domestic demand data and aim to stabilize economic growth.

Australia’s NAB business confidence index rose to +7, its highest since 2022, supported by strength in the services and construction sectors.

Chinese President Xi Jinping held a phone call with Brazilian President Lula, likely discussing agricultural trade. The U.S. is pressing China to quadruple soybean purchases as a goodwill gesture in trade talks, but Brazil remains the main supplier for now.

Singapore’s Q2 GDP grew 4.4% y/y (forecast 4.3%) and 1.4% q/q, prompting authorities to raise their 2025 growth forecast to 1.5–2.5%.

South Korean President Lee Jae-myung will meet U.S. President Donald Trump in Washington on August 25 to discuss security cooperation and economic relations.

BofA believes the Fed should avoid a rate cut in September, pointing to inflation above target and tariff hikes that could further lift prices. The bank does not foresee cuts in 2025.