The Overnight Report: Trade Deals, New Highs

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Sentiment is risk on again as more trade deals emerge, Japan the latest with reports the EU deal is to follow as China talks resume this weekend.

The S&P500 reached another all-time high, the twelth in 2025, with the Nasdaq equally setting a new high.

ASX200 futures are pointing to a positive start and possibly a new high for the local index.

By Rudi Filapek-Vandyck

Good Morning,

The ASX200 rose 60pts of 0.7% yesterday to 8737, tickling new recod highs. Ten of the eleven sectors rose with miners up 1.2% and banks joining the party, up 0.8%. Utilities was the only sector to fade, down -0.2%. 

For yesterday’s ASX Winners and Losers see https://fnarena.com/index.php/2025/07/23/asx-winners-and-losers-of-today-23-07-25/

NAB Markets Today Research extract

Risk assets rallied in Asia yesterday following the US-Japan trade deal (15% tariff inclusive of autos) and extended overnight on growing expectations of a similar deal with the EU). 

The Nikkei finished up a very sharp 3.5%; key auto names soared such as Toyota rose 14.3%. That sentiment was also seen overnight with the Eurostoxx50 rising 1.0% and the S&P500 hitting another all-time high and up 0.8%. Yields nudged higher with the US 10yr up 3.6bps to 4.38% JGB yields also rose across the curve with a weak 40-year auction weighing. Post close, big tech names were mixed following reports by Alphabet up 3.1%, Tesla and IBM down -0.2% and -5.3%, respectively.

The details of the US-Japan trade deal were taken very positively. The tariff rate of 15% is lower than the 25% which was initially threatened. Importantly, the 15% rate will also include autos, which means the tariff rate on autos actually falls to 15% from its current 25%.

What that exactly means for the competitiveness of US auto makers is less clear given the 25% tariff on imported cars/parts, and the 50% tariffs on steel, aluminium and copper. Japan also committed to investing US$550bn in the US and forming a JV for LNG exploration in Alaska.

As for growing expectations of a US-EU trade deal. The FT reported the Japanese deal is being seen as a template, with Brussels reportedly willing to accept similar terms to avoid a 30% tariff. However, the FT report also noted the EU would still want tariff waivers on products that include aircraft, spirits and medical devices. News of the deal boosted the Euro, which had been drifting lower prior. 

ANZ Bank: Australian Morning Focus extract

Crude oil edged higher amid optimism over US-EU trade talks. News emerged the two sides were working towards a deal that would set a 15% tariff for most goods, like the US pact with Japan. 

Bessent said he’ll discuss a potential extension of the trade truce with China during talks in Stockholm next week. The prospect of a trade deal triggered a risk-on tone and boosted sentiment across commodity markets.

Earlier in the session, WTI crude came under pressure after the US Energy Information Administration reported inventories at Cushing, the pricing point for crude in the US, had risen to their highest level since June. However, that ignored the fact that overall commercial inventories across the US fell last week by -3,169kbbl.

That left them at their lowest level for this time of the year since 2018. There was also a drawdown in gasoline inventories (-1,738kbbl) while distillate stockpiles remain near their lowest seasonal level since 1996. This suggests demand over the northern hemisphere summer has been relatively strong. 

The slide in European gas prices resumed as ample supply helped refill storage facilities. Europe has boosted LNG imports this year after ending winter with reserves lower than usual. However, lower demand from China, where imports fell almost -20% in the first half of the year, has increased the availability of cargoes on the spot market.

Europe is on track to reach storage levels of 83% by 1 November, however that is still below last year’s levels and lower than the five-year average. The International Energy Agency also warned that strong domestic demand, lower pipe gas supply and higher storage injections are contributing to a tighter global market. North Asia LNG prices fell as signs of tightness eased. LNG stockpiles held by Japanese power generators rose by nearly 3% on the week to 1.92mt on 20 July. 

LME copper ended the session higher amid the risk-on tone. However, the gains were even greater on the New York-based COMEX as the market continues to adjust to the impending 50% tariffs on US copper imports. COMEX copper for July delivery gained 1.72% to US$5.795/lb, a record high.

Reports emerged earlier this week that producers are still rushing to send copper from Australia and Latin America to US ports before the 1 August deadline. The higher US prices are also benefiting domestic producers. Freeport-McMoRan Inc said it expects to bring in an additional US$1.7bn in US copper sales due to the premium for domestic US copper. However, it also warned that an ongoing trade war will increase the cost of goods it purchases by 5%. 

Iron ore futures pulled back from a five-month high amid signs of stronger supply. Vale, one of the world’s biggest producers, said it produced 83.6mt in the three months to June, the highest second quarter production since 2021. Still, the miner said sales lagged production and it offered a wider range of grades to suit demand amid stressed steel margins.

Sentiment has been broadly positive this week following the announcement that China will be proceeding with the CNY1.2trn hydropower project. That could provide a massive boost to the concrete and steel sectors, which have been struggling amid a slowdown in the property sector. 

Easing trade tensions weighed on haven demand for gold. The precious metal ended the session down -1.3%

Corporate news in Australia

-PointsBet Holdings ((PBH)) rejects Betr Entertainment ((BBT)) bid and backs Mixi’s $1.20 cash offer to shareholders.

-Lendlease ((LLC)) is set to divest -$2.9bn in mall assets as management winds down retail funds.

-CC Capital will use debt to fund the $3.3bn buyout of MLC.

-Concerns over PNG assets and sovereign ownership risks rise for Adnoc and Carlyle’s $30bn takeover offer for Santos ((STO)).

-A $300m ASX-listed private credit trust roadshow fundraising from Revolution has commenced.

-CoStar envisages the ACCC investigation into REA Group ((REA)) could boost Domain Holdings ((DHG)) market position.

-Wooside Energy ((WDS)) has taken a -US$140m profit impairment after scrapping a major hydrogen project in the US. Costs for decommissioning old oil and gas fields have risen to -US$500m to be booked in 1H2025 earnings.

On the calendar today:

-US June Building Permits

-XX Global July PMIs

-CHALICE MINING LIMITED ((CHN)) Qtr report

-CORONADO GLOBAL RESOURCES INC ((CRN)) Qtr Report

-FORTESCUE LIMITED ((FMG)) Qtrly update

-INSIGNIA FINANCIAL LIMITED ((IFL)) Qtrly update

-KAROON ENERGY LIMITED ((KAR)) Qtrly update

-LYNAS RARE EARTHS LIMITED ((LYC)) Qtr report

-MAC COPPER LIMITED ((MAC)) Qtr report

-MACQUARIE GROUP LIMITED ((MQG)) AGM

-NEWMONT CORPORATION REGISTERED ((NEM)) earnings report

-NORTHERN STAR RESOURCES LIMITED ((NST)) Qtr report

-SANDFIRE RESOURCES LIMITED ((SFR)) Qtr report

-SYRAH RESOURCES LIMITED ((SYR)) Qtr Report

-TALGA GROUP LIMITED ((TLG)) Qtr Report

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

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