US stocks unwound some of last Friday's dovish post-Powell reaction - Newsquawk Asia-Pac Market Open

• US stocks declined and all indices closed in the red with underperformance in the small-cap Russell 2000 index after rallying on Friday as markets largely unwound the recent post-dovish Powell moves, while sectors were predominantly lower, particularly defensives such as Consumer Staples, Health Care and Utilities, although Communication, Tech and Energy outperformed. There was little fresh fundamental news behind the reversal, but it is worth noting that even after Powell's dovish speech at Jackson Hole, money markets are still not fully pricing in a 25bps cut in September with a current implied probability of around 80% for such a move, while there is still key data to digest between now and the September meeting, particularly the US NFP report next week, as well as July PCE on August 29th and August CPI data on September 11th.
• USD gained to recoup the majority of the losses seen on Friday in the wake of a dovish Powell, while news flow was light ahead of this week's risk events such as Nvidia earnings, PCE, and GDP.
• Looking ahead, highlights include Japanese Services PPI & BoJ Core CPI, Singapore Industrial Production, RBA Minutes, Comments from Fed's Williams, Supply from Japan.

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LOOKING AHEAD

• Highlights include Japanese Services PPI & BoJ Core CPI, Singapore Industrial Production, RBA Minutes, Comments from Fed's Williams, Supply from Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks declined and all indices closed in the red with underperformance in the small-cap Russell 2000 index after rallying on Friday as markets largely unwound the recent post-dovish Powell moves, while sectors were predominantly lower, particularly defensives such as Consumer Staples, Health Care and Utilities, although Communication, Tech and Energy outperformed. There was little fresh fundamental news behind the reversal, but it is worth noting that even after Powell's dovish speech at Jackson Hole, money markets are still not fully pricing in a 25bps cut in September with a current implied probability of around 80% for such a move, while there is still key data to digest between now and the September meeting, particularly the US NFP report next week, as well as July PCE on August 29th and August CPI data on September 11th.
• SPX -0.42% at 6,439, NDX -0.31% at 23,426, DJI -0.77% at 45,283, RUT -1.05% at 2,337.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said regarding South Korea that they would have a good meeting and he does not mind renegotiating the South Korea deal but added that it doesn't mean they will get anything, while he also stated that they will have serious discussions and are thinking about contracting some ships from South Korea.
• US President Trump’s administration reportedly weighs visa sanctions for EU and EU member state officials over the bloc's digital services act, according to Reuters citing sources.
• White House official said furniture tariffs will be imposed as part of the national security investigation into lumber, according to CNBC.
• Canadian and US officials are to meet after Canada removes some tariffs, according to Bloomberg News.
• US President Trump said Chinese President Xi wants him to come to China, and he is going to allow Chinese students to come in, while he added that China has to give the US magnets and if they do not, the US will charge them 200% tariffs or something. Trump said at some point, he will visit China and maybe he will go to China with South Korean President Lee.
• TSMC (2330 TT) has stopped using Chinese chipmaking equipment at its most advanced facilities to mitigate risks of facing US restrictions and subsequent supply chain disruptions, according to Nikkei sources.
• Taiwan's Chunghwa Post said it will be suspending the acceptance and delivery of commercial mail items destined for the US starting on the 26th August.
• Japanese Tariff negotiator Akazawa is to visit the US as early as this week and is likely to discuss a joint communique, according to FNN.

NOTABLE HEADLINES

• Fed's Logan (2026 voter) said the US has more room to reduce reserves, and as the reserve levels drop, it is preferable for the Fed to seek to meet lower long-run bank demand for reserves rather than the higher short-run demand. Logan said responding to banks' increased short-run demand for reserves is a recipe for ever-expanding central bank balance sheet and she repeated that the Fed balance sheet should hold primarily treasuries in the long run.
• US President Trump said on US stakes in companies, that he wants to get as much as he can and hopes to have many more cases like Intel (INTC), while he added there will be other cases.
• NEC Director Hassett said it is appropriate for the Fed to consider a rate cut and that Fed Chair Powell's presentation was sound, while Hassett doubts Powell can get back in President Trump's good books and expects the decision on the Chairman will run out for a few months before Trump decides.

DATA RECAP

• US Dallas Fed Mfg Bus Index (Aug) -1.8 (Prev. 0.9)
• US National Activity Index (Jul) -0.19 (Prev. -0.1, Rev. -0.18)
• US Build Permits R Number (Jul) 1.362M (Prev. 1.354M)
• US New Home Sales-Units (Jul) 0.652M vs. Exp. 0.63M (Prev. 0.627M, Rev. 0.656M)

FX

• USD gained to recoup the majority of the losses seen on Friday in the wake of a dovish Powell, while news flow was light ahead of this week's risk events such as Nvidia earnings, PCE, and GDP.
• EUR was pressured amid the firmer buck and with light catalysts from the bloc, while the single currency was not helped by mixed German Ifo data.
• GBP softened in holiday-quietened conditions with participants in the world’s largest FX trading hub away due to the UK bank holiday.
• JPY weakened with USD/JPY edging higher during US trade as the dollar nursed the recent Powell-triggered losses.

FIXED INCOME

• T-notes settled lower with the curve bear flattening to pare some of last Friday's post-Powell dovish reaction ahead of auctions.

COMMODITIES

• Oil prices were firmer to start the week and edged higher through the US session, which was seemingly a function of geopolitical risk premium.
• Dubai set official crude for November at parity to GME Oman (prev. USD 0.25/bbl discount).
• Russia's Energy Ministry and oil companies are working on additional introduction of reserve capacities for refining growth, according to Interfax.
• Pakistan will reportedly ask Qatar to defer LNG for years on weak demand, according to Bloomberg.
• Canada's Alberta province in talks to invest in Japan's refining sector and Alberta could help fund the coker unit to enable Japan to process more Canadian heavy crude, according to Reuters sources.

GEOPOLITICAL

MIDDLE EAST

• US President Trump said Gaza has to be settled soon, while he thinks they will have a good and conclusive ending within the next 2-3 weeks.
• Hezbollah chief Naim Qassem said Israel may occupy, but they will confront it to prevent it from settling and achieving its goals, while he added that this confrontation will continue.
• Iran wants a new safeguards agreement CSA with more limited rights for the agency ahead of talks in Geneva on Tuesday, although IAEA sees that as a red line, which is a reason to have "dead low expectations", according to WSJ's Norman.
• Russia's Kremlin said that President Putin held a phone call with the Iranian President Pezeshkian and discussed the Iranian nuclear programme, according to RIA.

RUSSIA-UKRAINE

• US President Trump, said on air support and the war in Ukraine, that they have not discussed specific security guarantees and the US will be back up regarding the war in Ukraine, while he added that the US deals with NATO and does not really deal with Ukraine. Furthermore, he said the US will spend no money on Ukraine anymore and he wants the war to end.
• US President Trump said regarding talks with Russian President Putin that they are also talking about nuclear missiles and stated "we" would like to denuclearise, while he added that Putin is reluctant to meet Ukrainian President Zelensky because he does not like him. Furthermore, Trump later commented that he discussed denuclearisation with Putin, and thinks that Russia and China would be willing to do it.
• US President Trump said Russian President Putin and Ukrainian President Zelensky should meet, while Trump said he may be there for the Putin-Zelensky meeting or may not and there could be consequences if they do not meet, but we will see what happens over a week or two and at that point, he will step in.
• Ukrainian President Zelensky said he had a good meeting with US Envoy Kellogg and that Ukraine values US readiness to be part of Ukraine's security architecture, while he discussed with Kellogg how to exert pressure on Russia to hold "real talks" to end the war and said military cooperation is important with the US, particularly on purchases of weapons and accord on drones. It was separately reported that US and Ukrainian officials are expected to meet later this week.

OTHER

• US President Trump thinks they can do something on North and South Korea and he looks forward to meeting with North Korean leader Kim, while South Korean President Lee said US President Trump is the only person who can solve the North Korean issue and that he would like to meet Kim this year.

ASIA-PAC

NOTABLE HEADLINES

• China's gaming regulator approved 166 (prev. 127 M/M) domestic online games in August and approved 7 (prev. 7 M/M) imported games.

EU/UK

NOTABLE HEADLINES

• French PM Bayrou said he will request a confidence vote in Parliament on September 8th.

DATA RECAP

• German Ifo Expectations New (Aug) 91.6 vs. Exp. 90.3 (Prev. 90.7)
• German Ifo Business Climate New (Aug) 89.0 vs. Exp. 88.3 (Prev. 88.6)
• German Ifo Current Conditions New (Aug) 86.4 vs. Exp. 86.7 (Prev. 86.5)