ASIA STOCKS: Taiwan Inflow Momentum Slows, Indonesia Inflows Continue

The ESU5 overnight range was 6272.50 - 6343.00, Asia is currently trading around 6270. The September contract made new all-time highs and then collapsed as the market interpreted that US CPI showed clear signs that tariffs are beginning to impact the core goods data. This morning has seen US futures open under pressure, ESU5 -0.20%, NQU5 -0.20%. The Price action does not look great with 3 failures now to extend beyond the 6350 area, a break back below 6230/50 could signal a deeper correction back to 6000/6100. Huge reversals in the broader market outside of tech, Russell -1.99%, Dow Transports -1.63%, Regional Bank Index -3.74% points to this weakness potentially having more to play out.

• Callum Thomas on X: "Deploy the Cash" Fund manager cash allocations drop to multi-year lows...”
• Lance Roberts(RIA): “Our most significant concern for Q2-2025 earnings and the rest of the year is slowing economic growth, which will spill over into consumer spending. There is a high correlation between Personal Consumption Expenditures (PCE) and earnings. To wit: “One of the better measures for developing a framework for future earnings growth is personal consumption expenditures (PCE), since they comprise nearly 70% of the economic equation. The annual percentage change in forward earnings tracks the yearly percentage change in PCE fairly closely. Given the recent softness in the employment data and the downturn in PCE, the risk to earnings is rising.” 
• Andreas Steno Larsen on X: ”If it wasn’t for the word “tariffs”, literally no one would care about the level of goods inflation we saw today. No one - this will pass to”
• (Bloomberg) -- The S&P 500 Index closed lower for the second time in three sessions on Tuesday, weighed down by financial companies as mixed earnings results from banks offset an upbeat report showing consumer prices are cooling.
• Short-term this is starting to look a little overdone with topside momentum having stalled above 3300 could we now get a healthy reversion back to the mean. First support is back towards the 6000/6100 area.

Fig 1: SPX(ESU5) Hourly Chart

Source: MNI - Market News/Bloomberg Finance L.P

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 4.25% 21 March 2036 bond. The line was last sold on 30 May 2025 for A$1200mn. This new line was sold by syndication on 5 February 2025 for A$15.0bn. Bidding at today’s auction is likely to be shaped by several key factors: 

• The outright yield is roughly 10-15bps higher than the previous auction level and about 10bps below the late February peak.
• However, the 3/10 yield curve is slightly flatter than the previous auction level and sits around 20bps flatter than its recent high.
• On the other hand, sentiment toward longer-dated global bonds has deteriorated over recent weeks.
• However, this bond is included in the XM futures basket, which may support demand.
• Overall, firm pricing is still anticipated at today’s auction, given the higher yields and other favourable factors.
• Results are due at 0200 BST / 1100 AEST.

Positive inflow momentum was a standout for Taiwan and South Korean markets yesterday. Sentiment around the AI/tech space was boosted by Nvidia resuming sales of a key chip to China (which was part of the broader US/China trade truce). Taiwan remains the best performer, with just under $1.8bn in net inflows in the past 5 trading days. Month to date, Taiwan has seen over $4.5bn in inflows. Tech equity bourses outperformed globally in Tuesday trade, although the firmer US yield backdrop (post the CPI outcome, which showed tariff effects emerging), has tempered sentiment in this space. 

• Elsewhere, trends were mostly softer, with India unable to sustain a positive bounce from the end of last week.
• Recent positive momentum into Thailand cooled.
• Indonesian markets also continued to see outflow pressures, now at over $350mn in July to date. The overnight news of a 19% tariff deal with the US may help stabilize sentiment, at least on a relative value basis with tariff rates elsewhere in the region mostly higher. 

Table 1: Asian Markets Net Equity Flows 

Source: Bloomberg Finance L.P./MNI