Asian shares rise, dollar strengthens ahead of US earnings; JGB yields surge
Oil prices edged lower after US President Donald Trump issued a 50-day deadline for Russia to end the war in Ukraine to avoid energy sanctions. Japanese government bonds yields jumped to multi-decade high as a critical upper house election neared.
Trump signalled he was open to discussions on tariffs after his weekend threat to impose 30 per cent duties on the European Union and Mexico from Aug 1. Japan is reportedly trying to schedule high-level talks with the US this Friday.
Market reaction to the tariff uncertainty has been rather benign, making earnings in the United States this week all the more important for cues, said National Australia Bank strategist Rodrigo Catril.
"It'll be interesting to see what companies are saying, in particular in terms of the forward-looking outlook, in terms of where they see the next quarter, how they see their margins, are they going to get squeezed, or are they planning to pass it on," Catril said in a NAB podcast.
"I think that this idea of complacency is also because we're not quite sure how this whole thing is going to play out," he added.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.4 per cent, after US stocks ended the previous session with meagre gains. Japan's Nikkei gauge added 0.2 per cent.
The EU accused the US of resisting efforts to strike a trade deal and warned of countermeasures if no agreement is reached. Trump said he was open to further discussions with the EU and other trading partners.
Japan's Prime Minister Shigeru Ishiba is arranging to meet US Treasury Secretary Scott Bessent in Tokyo on Friday, the Yomiuri newspaper reported, ahead of an Aug 1 deadline before 25 per cent tariffs are due to take effect.
Ishiba also has an election to contend with on Sunday, with polls showing his ruling coalition may lose their majority in the upper house to political opponents who are advocating for expansive spending.
The benchmark 10-year JGB yield jumped to 1.595 per cent, highest since October 2008, while the 30-year yield hit an all-time high of 3.195 per cent.
Meanwhile, the US earnings season is set to begin on Tuesday, with second-quarter reports from major banks. S&P 500 profits are expected to rise 5.8 per cent year-over-year, according to LSEG data. The outlook has dimmed sharply since the early April forecast of 10.2 per cent growth, before Trump launched his trade war.
Investors are also waiting for US consumer price data for June, due on Tuesday, and will monitor for any upward pressure on prices from tariffs.
The dollar was little changed at 147.71 yen after touching a three-week high. The euro was flat at US$1.1672.
US crude dipped 0.3 per cent to US$66.80 a barrel. Trump announced new weapons shipments for Ukraine on Monday, and threatened sanctions on buyers of Russian exports unless Moscow agrees to a peace deal in 50 days.
Gold inched up 0.1 per cent at US$3,348.35 per ounce, while spot silver gained 0.1 per cent to US$38.15 per ounce, after hitting its highest level since September 2011 in the previous session.
In early trades, the pan-region Euro Stoxx 50 futures were up 0.1 per cent, German DAX futures were up 0.1 per cent, and FTSE futures were up 0.2 per cent. US stock futures, the S&P 500 e-minis, were down 0.1 per cent.
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