Oil prices fell below $65 per barrel. The RBA and RBNZ are likely to cut rates further in August

As of Wednesday, the Dow Jones Index (US30) rose by 0.18%. The S&P 500 Index (US500) gained 0.73%, and the tech-heavy Nasdaq Index (US100) closed up by 1.21%. The US stocks rose as investors reacted to strong corporate earnings and a major announcement from Apple, which pledged to invest an additional $100 billion in US manufacturing. Despite positive earnings reports from companies like Disney and Uber, some stocks, such as AMD, Snap, and Super Micro Computer, plunged due to disappointing results. Investor sentiment was supported by rising expectations of a Fed rate cut in September, with odds climbing to over 93% following soft labor market data. However, trade tensions flared again after President Trump imposed an additional 25% tariff on Indian goods due to continued imports of Russian oil, adding uncertainty.

European stock markets mostly rose yesterday. Germany’s DAX (DE40) increased by 0.33%, France’s CAC 40 (FR40) closed up 0.18%, Spain’s IBEX 35 (ES35) gained 0.90%, and the UK’s FTSE 100 (UK100) ended 0.24% higher. The Frankfurt DAX closed higher at 23,924, marking its third consecutive session of gains as traders weighed corporate earnings and looming US tariffs. President Trump is expected to impose broad tariffs on August 7 against countries that have not concluded trade deals. While the EU and US are finalizing their agreement, 15% tariffs on EU goods will take effect tomorrow, with Trump warning of a possible increase to 35% if the promised European investments are not fulfilled. He also confirmed plans to introduce tariffs on pharmaceutical imports “within the next week or so.”

WTI crude oil prices reversed earlier gains on Wednesday and fell by 1.2% to $64.30 per barrel, marking the fifth consecutive decline and hitting a new six-week low. Prices initially rose on supply concerns following President Trump’s decree imposing 25% tariffs on Indian goods due to Russian oil imports. Temporary support also came from a larger-than-expected US crude inventory draw of 3 million barrels. However, gains were dampened after US Secretary of State Marco Rubio stated that an announcement regarding potential sanctions against Russia could come later in the day, adding uncertainty to the market.

Asian markets mostly rose yesterday. Japan’s Nikkei 225 (JP225) climbed by 0.60%, China’s FTSE China A50 (CHA50) dipped by 0.07%, Hong Kong’s Hang Seng (HK50) edged up 0.03%, and Australia’s ASX 200 (AU200) closed with a solid 0.84% gain.

The Australian dollar strengthened to USD 0.648 on Wednesday, extending gains from the previous session, as rising expectations of a Fed rate cut in September boosted risk sentiment. Meanwhile, with little data expected this week, the Aussie may face headwinds as markets fully price in a 25 bp RBA rate cut to 3.60% on August 12.

The New Zealand dollar rose to USD 0.592 on Wednesday, rebounding from multi-week lows. However, the Kiwi’s upside may be limited by weaker-than-expected local employment data. New Zealand’s unemployment rate in Q2 rose to nearly a five-year high of 5.2%, slightly below expectations of 5.3%. This strengthened expectations that the Reserve Bank of New Zealand may cut rates at its upcoming August meeting. Markets currently price in a 90% chance of a 25 bp cut, with further easing to 2.75% expected by year-end or early next year. Additional concern comes from the Trump administration’s imposition of 15% tariffs on New Zealand exports starting August 7, which could place further pressure on the export-driven economy.

The offshore yuan remained stable around 7.18 per dollar on Thursday as investors digested the latest trade data. China’s trade surplus in July 2025 rose to $98.24 billion from $85.27 billion a year earlier. Export growth reached a three-month high of 7.2% year-over-year, significantly beating market expectations of 5.4%, mainly due to a temporary easing in tariff pressures ahead of the looming August deadline. Meanwhile, imports unexpectedly rose to an annual high, increasing 4.1% year-over-year, defying expectations for a 1.0% decline. In light of recent developments tied to a trade truce, President Donald Trump stated that the US and China are “very close” to extending the agreement set to expire on August 12.