The dominant macro driver overnight was a sharp reversal in crude oil, with Brent falling 5.05% to $83.90/bbl and WTI dropping 4.22% to $79.12/bbl, following signals of de-escalation in US-Iran tensions and a resumption of negotiations. That move pulled US 10-year Treasury yields down 4bp to 4.65% and 30-year yields down 4bp to 5.12%, with the 2-year easing 2bp to 4.31% — a modest bull-steepening that implies markets are partially pricing out the oil-driven inflation premium that had been building, though yields remain elevated in absolute terms and the Fed held rates steady at its July 28-29 meeting without signalling imminent cuts. VIX eased 2.41% to 18.22, consistent with a modest improvement in risk appetite, though the level still reflects underlying uncertainty around AI capex, central bank timing and geopolitical fragility.
For Asia-Pacific, the cross-asset picture is complicated. USD/JPY held near 163.86 — a multidecade weak level for the yen — concentrating pressure on Japan's import-sensitive sectors and amplifying inflation risks ahead of the BoJ's July 30-31 policy meeting, where markets are pricing increasing odds of a rate hike. The TOPIX Banks sector fell 3.98% and Steel & Metals dropped 5.01% in the prior session, underscoring how domestic rate-sensitive and commodity-linked names absorbed the volatility. In China, USD/CNY ticked up slightly to 6.771, while the CSI 300 fell 3.60% even as the SSE Composite rose 1.15% — a divergence that points to concentrated selling in large-cap and index-heavy names rather than a broad market retreat. Korea's KOSPI bucked regional weakness to close up 0.97%, but semiconductor names were under severe pressure, with the AI/chip selloff the key cross-asset fault line concentrated in the Korea-Japan-Taiwan technology corridor.