Market navigator: week of 11 August 2025

Summary

• What happened last week: US reciprocal tariffs took effect, while the Bank of England delivered a cautious 25 bp cut and China demonstrated export resilience.
• Markets in focus: Nasdaq 100 reached new highs, Japanese markets neared historical peaks, while crude oil faced pressure from weak demand and Russia-US diplomatic developments.
• The week ahead: Key focus on RBA rate decision and US inflation data, plus GDP releases from UK and Japan and earnings from Chinese tech giants.

What happened last week

• Reciprocal tariffs now effective: The US implemented country-specific tariffs effective 7 August, with Switzerland unable to secure concessions on the assigned 39% levy. India faces potential tariff escalation from 25% to 50% beginning 27 August for Russian oil purchases. Market participants remain cautiously optimistic that the China trade truce deadline of 12 August will receive another 90-day extension.
• Bank of England's undecisive cut: The committee narrowly approved a 25 basis point rate cut from 4.25% to 4.00% after two voting rounds, balancing inflation risks potentially rising to 4% against labour market weakness. Bond futures markets reduced probability estimates for additional 2025 rate cuts to 60%, while GBP/USD strengthened 0.6% to 1.3448.
• China maintains robust trade momentum: Export performance exceeded expectations with a 7.2% surge in July to $322 billion despite declining US shipments. Strong flows to the European Union, Southeast Asia, and Australia offset a 22% US contraction. Imports rose 4.1%, with integrated circuits hitting four-year highs and commodities like copper and crude oil posting gains, though sustainability concerns persist given China's property sector challenges.
• Geopolitical developments influence energy markets: The scheduled Trump-Putin meeting in Alaska on Friday reflects Russia's softened diplomatic stance ahead of the Russia-Ukraine war truce deadline, following US threats of additional sanctions. West Texas Intermediate (WTI) crude oil futures declined more than 5% during the week, reaching an eight-week low.

Markets in focus

Tech-powered advance drives US equities to new highs

Following the previous week's sharp correction triggered by deteriorating labour market conditions, equity markets demonstrated remarkable resilience. Investors largely dismissed disappointing Institute for Supply Management (ISM) data indicating manufacturing sector weakness at levels last seen in October 2024.

Despite Trump's announcement of 100% tariffs on semiconductor imports, exemptions for companies committing to US production shifts provided market reassurance. The Nasdaq 100 index achieved a new record closing high on Friday, generating 4.2% weekly returns. Apple shares surged 13% following CEO Tim Cook's announcement of expanded US manufacturing plans during his Oval Office meeting with Trump.

Data analytics company Palantir delivered record-breaking $1 billion quarterly revenues, raising full-year guidance above Wall Street expectations, driving share prices up 16%. Conversely, construction equipment manufacturer Caterpillar missed estimates, citing tariff-related concerns potentially costing $1.3-$1.5 billion, with shares declining 4.0%.

The US Tech 100 bounced from the ascending trend channel's lower boundary established in mid-May, targeting the all-time high of 23,711. This suggests Elliott Wave Theory's Wave 3 remains incomplete, with a 200% Fibonacci extension from the 21 April base potentially driving the index toward 24,718 before Wave 4 correction materialises. The ascending channel's lower boundary provides support around 22,920.

Figure 1: US Tech 100 index (daily) price chart

Nikkei approaches historical record

Japanese equities surged last Friday, with the Nikkei 225 advancing 2% while the Topix achieved a record close above 3,000. Performance was driven by robust corporate earnings and expectations that the US would not stack tariffs on goods that are subject to a levy higher than the broad-based 15% agreed in July.

SoftBank Group rallied over 13% as its artificial intelligence investment portfolio delivered substantial returns, generating net profits of 422 billion yen last quarter compared to losses in the corresponding period last year. Sony gained 8% following earnings outperformance and upward full-year guidance revisions.

However, some Japanese corporations face headwinds from elevated tariffs and yen strength. Car giant Toyota surpassed both revenue and earnings forecasts but reduced its full-year operating income forecast by 600 billion yen to 3.2 trillion yen for the current financial year.

The Japan 225 index trades just 0.9% below its historical peak established 13 months ago. Technical analysis indicates strong potential for new high achievement if the index can sustainably penetrate the current resistance level at 42,000. Failure to breakthrough could trigger a retreat to 40,180, with major support positioned around 38,164.

Figure 2: Japan 225 index (daily) price chart

Crude oil faces mounting pressure

Oil market fundamentals exhibit increasing bearish characteristics as multiple supply and demand challenges converge. US crude demand has deteriorated while inventory drawdown pace has significantly decelerated according to US Energy Information Administration (EIA) data. OPEC+'s decision at last Sunday's meeting to increase production by 547,000 barrels per day in September adds substantial supply pressure to an already weakening demand environment.

Geopolitical developments compound these fundamental headwinds, with recent media reports suggesting imminent Putin-Trump summit discussions regarding Ukraine war resolution. A potential ceasefire agreement between Russia and Ukraine could prompt relaxation of US sanctions on Russian oil exports, further increasing global supply amid ongoing OPEC+ production increases.

Technical analysis presents a challenging outlook for US crude oil. Medium-term price movement remains constrained by the downward trend established in September 2023. Since the Israel-Iran conflict conclusion, US crude oil futures have declined 17%, rapidly breaching the 200-day simple moving average (SMA), 50-day SMA, and 20-day SMA in the past week. Current price levels at $63 receive critical support from late June local troughs. Failure to maintain these levels could trigger further decline towards $58.75.

Figure 3: US crude oil futures (daily) price chart

The week ahead

The week ahead presents critical monetary policy and economic growth assessments across major economies. The Reserve Bank of Australia's (RBA) interest rate decision coincides with US consumer price readings on Tuesday. The inflation print carry heightened significance following disappointing employment data two weeks ago, which amplified expectations for accelerated and deeper Federal Reserve (Fed) rate cuts.

During July's meeting, the RBA surprised markets by halting rate cuts, citing requirements for sustained evidence of inflation moderating to 2.5% or below. Latest quarterly data revealing consumer price inflation further declined to 2.1% in the second quarter, representing the lowest level since Q1 2021. We anticipate the central bank will deliver a 25 basis point cut, bringing the target cash rate to 3.60% to support the Australian economy amid global uncertainties.

Economic growth comes into sharp focus with preliminary Q2 gross domestic product (GDP) releases from both the UK and Japan, while China's industrial production and retail sales data will assess the sustainability of government stimulus measure effect.

Corporate earnings dynamics shift notably as US reporting activity winds down, while China's earnings season intensifies with technology giants Tencent, JD.com, and NetEase providing crucial insights into China's digital economy health and consumer spending patterns.

Figure 4: Australia inflation rate vs. RBA cash rate

Key macro events this week

Tuesday 12 August 2025

• 9.30am (HK time) — Australia NAB Business Confidence (July): previous 5
• 12.30pm (HK time) — Australia RBA Interest Rate Decision: previous 3.85%, consensus 3.60%
• 2.00pm (HK time) — UK Unemployment Rate (June): previous 4.7%, consensus 4.7%
• 8.30pm (HK time) — US Core Inflation Rate MoM (July): previous 0.2%, consensus 0.3%
• 8.30pm (HK time) — US Core Inflation Rate YoY (July): previous 2.9%, consensus 3.0%
• 8.30pm (HK time) — US Inflation Rate MoM (July): previous 0.3%, consensus 0.2%
• 8.30pm (HK time) — US Inflation Rate YoY (July): previous 2.7%, consensus 2.8%

Thursday 14 August 2025

• 2.00pm (HK time) — UK GDP Growth Rate QoQ Preliminary (Q2): previous 0.7%, consensus 0.1%
• 8.30pm (HK time) — US Producer Price Index MoM (July): previous 0%, consensus 0.2%

Friday 15 August 2025

• 7.50am (HK time) — Japan GDP Growth Rate QoQ Preliminary (Q2): previous 0.0%, consensus 0.1%
• 10.00am (HK time) — China Industrial Production YoY (July): previous 6.8%, consensus 5.8%
• 10.00pm (HK time) — US Retail Sales MoM (July): previous 0.6%, consensus 0.5%
• 10.00pm (HK time) — US Michigan Consumer Sentiment Preliminary (August): previous 61.7, consensus 62.1

Key corporate earnings

(in local exchange time)

Wednesday 13 August 2025

• Cisco Systems
• Tencent

Thursday 14 August 2025

• Applied Materials
• NetEase
• JD.com

Source: Trading Economics, LSEG (as of 9 August 2025)