Key Points

• Australian Stocks Hit Record High: Australia’s S&P/ASX 200 surged to a record 8,757.2, supported by mining and biotech gains, while broader Asia-Pacific markets traded mixed following strong U.S. economic data and corporate earnings.
• Hedge Funds Exit Japanese Equities: Global hedge funds sold Japanese stocks at the fastest pace in over two months ahead of the upper house election, with political uncertainty adding to July’s underperformance in the Nikkei 225 and Topix.
• U.S. Rare-Earth Magnet Imports from China Jump 660%: American firms rushed to secure critical rare-earth magnets after a preliminary trade deal, highlighting U.S. dependency on China’s near-monopoly in advanced manufacturing components.
• U.S.-EU Tariff Tensions Escalate: Washington confirmed an Aug. 1 deadline for 30% tariffs on EU imports, pressuring Brussels to secure a deal as analysts warn even a 15%-20% rate could severely damage European exports, particularly in autos.

Australian Stocks Hit Record High Amid Mixed Asia-Pacific Trading

Australian equities surged to fresh record highs, with the S&P/ASX 200 closing 1.37% higher at 8,757.2, driven by gains in mining and biotech heavyweights such as BHP, Rio Tinto, and CSL. Asia-Pacific markets were mixed, as South Korea’s Kospi slipped 0.13% while China’s CSI 300 rose 0.6%. TSMC gained over 2% after posting a 61% jump in Q2 profit, underscoring sustained AI chip demand.

Meanwhile, Japan’s core inflation cooled to 3.3% in June, in line with expectations, while rice price easing supported the decline. Bitcoin rebounded above $120,000 as U.S. lawmakers advanced stablecoin regulation.

Hedge Funds Cut Japanese Equity Exposure Ahead of Election Setback

Global hedge funds sold Japanese equities at the fastest pace in over two months ahead of Sunday’s upper house election, Goldman Sachs reported. The Nikkei 225 is down 1.7% month-to-date, while the Topix has fallen 0.6%, underperforming global peers. The election dealt a political blow to Prime Minister Shigeru Ishiba, further pressuring sentiment, though he pledged to stay in office to conclude U.S. tariff negotiations.

Goldman noted hedge fund activity was driven by increased short positioning and moderate long reductions between July 11–17, reflecting heightened caution toward Japan’s political and economic outlook.

U.S. Rare-Earth Magnet Imports from China Surge Amid Supply Race

China’s exports of rare-earth magnets to the U.S. jumped 660% in June to 353 metric tons, as American firms rushed to secure supplies following last month’s preliminary trade framework between Washington and Beijing. The U.S., heavily reliant on imports for automotive, electronics, and renewable energy sectors, was China’s second-largest buyer after Germany. Total Chinese exports rose 160% from May to 3,188 metric tons but remained 38% below last year’s levels.

The surge highlights China’s dominance, controlling 90% of the rare-earth magnet market, and underscores the U.S.’s struggle to diversify supply despite recent recycling initiatives.

U.S. Holds Firm on Tariff Deadline as EU Scrambles for Deal

The U.S. reaffirmed its Aug. 1 deadline for imposing a baseline 30% tariff on EU imports, raising pressure on Brussels to strike a trade deal. Commerce Secretary Howard Lutnick said talks could continue after the deadline, but tariffs will take effect as planned. Economists warn that even a negotiated 15%-20% rate would severely hit European exports, particularly Germany’s auto sector, already pressured by euro strength.

The EU is preparing retaliatory measures, including levies on up to €72 billion of U.S. goods, signaling a tougher stance as it seeks a deal comparable to the U.K.’s lower-tariff framework.

Conclusion

Global markets are navigating a complex landscape where policy pressures and economic data are shaping sentiment. The EU’s new crude cap adds geopolitical weight, while U.S. and European earnings continue to buoy equity markets. Despite a softer dollar, underlying strength in U.S. retail and job figures suggests Fed caution. With both macroeconomic indicators and corporate results delivering surprises, investors should maintain flexibility as central bank communications and trade developments introduce volatility.

Investment Insights

Australian equities’ record high highlights investor rotation into resource-heavy markets amid strong commodity demand; selective exposure to mining and biotech remains attractive.

Hedge fund selloff in Japan ahead of elections suggests political risk repricing; long-term investors may find value opportunities if post-election policy stabilizes.

U.S. scramble for rare-earth magnets underscores supply chain vulnerabilities; companies securing alternative sourcing or recycling capabilities could gain a strategic edge.

U.S.-EU tariff tensions threaten European exporters, particularly autos; investors should monitor hedging opportunities and consider defensive positioning in EU industrials.

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