Markets Today: RBA Cuts Rates, UK Labor Market Weakens, US-China Tariff Truce Extended, FTSE 100 Eyes ATH

[Ben Graham]

Asia Market Wrap - RBA Cuts Rates, Nikkei Hits Fresh All-Time Highs

Most Read: Markets Weekly Outlook - US Inflation, EU/UK GDP and RBA Meeting to Shape Market Moves

Asian stocks rose 0.6%, though gains were trimmed after China advised local companies not to use Nvidia's H20 processors. Earlier, Trump said he might allow Nvidia to sell a less advanced version of its AI chip to China.

Tech stocks in Asia climbed on Tuesday, boosted by chipmakers like Advantest, as Micron's positive outlook and easing tensions at Intel improved market sentiment.

Japan's Nikkei-225 stood out, jumping 2.4% to a record high, driven by Softbank's surge. Meanwhile, the yen weakened for the third day in a row.

For more on the Nikkei, read Nikkei 225 Update: Bullish impulsive sequence intact, new resistance levels to watch after new all-time high

Trump's decision on chip exports helped calm market fears about stricter tech sanctions and possible supply chain issues.

China asked local companies, especially in government projects, to stop using Nvidia's H20 processors. This makes it harder for Nvidia to recover billions in lost revenue from China and complicates the US government's efforts to benefit financially from these sales.

Australia's central bank lowered interest rates for the third time this year on Tuesday, hinting that more cuts might be needed to boost inflation and employment as the economy slows down.

After a two-day meeting, the Reserve Bank of Australia reduced the main cash rate by 0.25% to 3.6%. They expect core inflation to settle near the middle of their 2%-3% target, assuming gradual policy adjustments.

US-China Tariff Deadline Extended by 90 Days

The US and China have agreed to extend their tariff truce for 90 days, avoiding steep triple-digit tariffs on each other's goods. This comes as US retailers prepare for the busy holiday season.

On Monday, President Trump announced on Truth Social that he signed an order delaying higher tariffs until November 10. China’s Commerce Ministry also paused its planned extra tariffs for 90 days.

The agreement prevents US tariffs on Chinese goods from rising to 145% and Chinese tariffs on U.S. goods from hitting 125%, which could have nearly stopped trade between the two countries. For now, US tariffs on Chinese imports stay at 30%, while China’s tariffs on US goods remain at 10%.

Source: LSEG

The move has boosted sentiment but it is important to note that the risk still remains in play until an actual deal is reached.

European Open - European Shares Advance

European stocks rose on Tuesday, helped by the extension of the U.S.-China tariff truce. Investors are also waiting for US inflation data to see how tariffs might affect prices and future interest rate decisions.

The STOXX 600 index, which tracks European shares, was up 0.4%, with most markets in positive territory.

Among individual stocks, UBS dropped 0.9% after an investor sold shares in the Swiss wealth manager.

Sartorius gained 3.6% after Jefferies upgraded its rating to "Buy."

Vestas Wind Systems rose 3.5% after getting new US orders for unnamed projects.

Spirax Group was the biggest winner, jumping 16% after its first-half results exceeded expectations.

On the FX front, the dollar rose 0.1% to 148.31 yen, while the euro stayed unchanged at 1.1613.

The British pound held steady at 1.3434, despite data showing a weaker jobs market in the UK.

The Australian dollar dropped 0.18% to 0.6502, and China's offshore yuan remained flat at 7.195 per dollar.

Currency Power Balance

Source: OANDA Labs

Gold prices edged up slightly on Tuesday, recovering from a sharp drop the day before, as investors waited for US inflation data to get clues about the Federal Reserve's plans for rate cuts.

Spot gold rose 0.1% to $3,348.41 per ounce, while US gold futures for December fell 0.2% to $3,397.10.

On Monday, gold prices fell 1.6%, and futures dropped over 2% after President Trump announced that tariffs would not be placed on imported gold bars, calming market concerns.

Oil prices went up on Tuesday after the US and China extended a pause on higher tariffs. This eased worries that their trade war could hurt their economies and reduce fuel demand in the world's top two oil-consuming countries.

Brent crude rose 14 cents (0.2%) to $66.77 a barrel, while US West Texas Intermediate crude increased by 8 cents (0.1%) to $64.04.

For a breakdown on Oil, read WTI Crude Forecast: Risk premium fades, supply pressures mount, bearish trend ahead

Economic Data Releases and Final Thoughts

Looking at the economic calendar, ZEW economic sentiment data will be released in a short while before all focus turns to US CPI data later in the day.

Today's core CPI (Consumer Price Index) is expected to rise by 0.4% compared to last month, which is higher than the 0.3% most people are predicting. If this happens, yearly core inflation would increase from 2.9% to 3.1%, and overall inflation would go from 2.7% to 2.9%.

Even though some investors are adjusting their positions before the data is released, a higher-than-expected inflation number could still boost the US dollar. This is because markets might lower their expectations for a Federal Reserve interest rate cut in September to less than 0.2%. However, the job market data is more important than inflation right now in my opinion. Many think that price increases caused by tariffs are temporary, and last month’s big revisions to payroll data add to this view. So, even if inflation rises by 0.4%, it could still align with a September rate cut if the job market continues to weaken.

Because of this, I don’t think higher inflation will lead to a lasting rise in the US dollar. Any boost is likely to be short-lived. Also on today’s schedule: the NFIB Small Business Optimism Index and July’s Federal budget report.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the Day - FTSE Index

From a technical standpoint, the FTSE 100 broke above the 100-day MA as discussed yesterday.

The index now has all-time highs in sight but a break above this level has proven a challenge over the past few weeks.

Since the back end of July, looking at the chart below we have attempted a break above the 9200 handle and have failed to do so around 4 times.

In an ideal scenario, the 100-day MA support needs to hold if the FTSE is to have any chance of breaking above the 9200 level.

FTSE Daily Chart, August 12. 2025

Source: TradingView.com (click to enlarge)

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

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