Asian stocks firm as investors eye tariff negotiations

The Advertiser

6 days ago

Asian share markets have held their ground near a four-year peak, buoyed by Wall Street's closing record high ahead of a slate of corporate earnings, while investors take stock of tariff negotiations between the US and its trading partners.
The Japanese markets returned to action after a holiday following a weekend when the ruling coalition suffered a defeat in upper house elections, although Prime Minister Shigeru Ishiba vowed to remain in his post.
Japanese shares briefly jumped at the open on Tuesday before trading modestly higher, while bonds had a muted reaction as the election results were largely priced in and were not as bad as investors had feared.
The yen rallied one per cent on Monday, recouping some of the losses from past weeks and was last little changed at 147.46 per dollar on Tuesday.
Kristina Clifton, an economist at the Commonwealth Bank of Australia, said the weakening of Ishiba's leadership will open the door to more fiscal expansion which is negative for Japanese assets, including the yen.
"The bottom line is longer term Japanese government bond yields and JPY can fall if concerns about Japan's fiscal spending deepen."
MSCI's broadest index of Asia-Pacific shares outside Japan hit its highest level since October 2021 in the early Asian hours but was last little changed. The index is up nearly 16 per cent in 2025.
Overnight, the S&P 500 and the Nasdaq notched record-high closes on Monday, lifted by Alphabet and other megacaps ahead of a burst of earnings reports this week.
Investor focus has been on tariff negotiations ahead of the August 1 deadline with the European Union exploring a broader set of possible countermeasures against the United States as prospects for an acceptable agreement with Washington fade.
The most important deals for the global outlook are with the EU and Japan, CBA's Clifton said.
"The USD reaction to the announcement of trade deals with these countries would depend on the details of the deals in our view," Clifton said, noting the dollar could turn down again against the euro and the British pound.
The euro was steady at $1.1689, after rising 0.5 per cent in the previous session but still away from the near four-year high it touched at the start of July.
The single currency is up 13 per cent in 2025 as investors look for alternatives to US assets bruised by tariff uncertainties.
The dollar index measure against six other key currencies was at 97.905.
The rumblings around the Federal Reserve's independence and whether US President Donald Trump will fire Fed chair Jerome Powell have kept investors on tenterhooks in recent weeks.
Trump appeared near the point of trying to fire Powell last week, but backed off with a nod to the market disruption that would likely follow.
US Treasury Secretary Scott Bessent on Monday said the entire Federal Reserve needed to be examined as an institution and whether it had been successful, further exacerbating worries about the independence of the US central bank.
The Fed is widely expected to hold rates steady in its July meeting but might lower rates later in the year. Market focus will be squarely on Powell's speech later on Tuesday for clues about when the Fed might ease policy.
Goldman Sachs strategists expect the Fed to deliver three consecutive 25-basis-point cuts starting in September, "provided inflation expectations remain in check amidst worries about Fed independence".
In commodities, oil prices edged lower on concerns the brewing trade war between major crude consumers the US and the European Union will curb fuel demand.
Brent crude futures fell 0.35 per cent, to $68.97 a barrel, while US West Texas Intermediate crude eased 0.31 per cent to $66.99 per barrel.
Asian share markets have held their ground near a four-year peak, buoyed by Wall Street's closing record high ahead of a slate of corporate earnings, while investors take stock of tariff negotiations between the US and its trading partners.
The Japanese markets returned to action after a holiday following a weekend when the ruling coalition suffered a defeat in upper house elections, although Prime Minister Shigeru Ishiba vowed to remain in his post.
Japanese shares briefly jumped at the open on Tuesday before trading modestly higher, while bonds had a muted reaction as the election results were largely priced in and were not as bad as investors had feared.
The yen rallied one per cent on Monday, recouping some of the losses from past weeks and was last little changed at 147.46 per dollar on Tuesday.
Kristina Clifton, an economist at the Commonwealth Bank of Australia, said the weakening of Ishiba's leadership will open the door to more fiscal expansion which is negative for Japanese assets, including the yen.
"The bottom line is longer term Japanese government bond yields and JPY can fall if concerns about Japan's fiscal spending deepen."
MSCI's broadest index of Asia-Pacific shares outside Japan hit its highest level since October 2021 in the early Asian hours but was last little changed. The index is up nearly 16 per cent in 2025.
Overnight, the S&P 500 and the Nasdaq notched record-high closes on Monday, lifted by Alphabet and other megacaps ahead of a burst of earnings reports this week.
Investor focus has been on tariff negotiations ahead of the August 1 deadline with the European Union exploring a broader set of possible countermeasures against the United States as prospects for an acceptable agreement with Washington fade.
The most important deals for the global outlook are with the EU and Japan, CBA's Clifton said.
"The USD reaction to the announcement of trade deals with these countries would depend on the details of the deals in our view," Clifton said, noting the dollar could turn down again against the euro and the British pound.
The euro was steady at $1.1689, after rising 0.5 per cent in the previous session but still away from the near four-year high it touched at the start of July.
The single currency is up 13 per cent in 2025 as investors look for alternatives to US assets bruised by tariff uncertainties.
The dollar index measure against six other key currencies was at 97.905.
The rumblings around the Federal Reserve's independence and whether US President Donald Trump will fire Fed chair Jerome Powell have kept investors on tenterhooks in recent weeks.
Trump appeared near the point of trying to fire Powell last week, but backed off with a nod to the market disruption that would likely follow.
US Treasury Secretary Scott Bessent on Monday said the entire Federal Reserve needed to be examined as an institution and whether it had been successful, further exacerbating worries about the independence of the US central bank.
The Fed is widely expected to hold rates steady in its July meeting but might lower rates later in the year. Market focus will be squarely on Powell's speech later on Tuesday for clues about when the Fed might ease policy.
Goldman Sachs strategists expect the Fed to deliver three consecutive 25-basis-point cuts starting in September, "provided inflation expectations remain in check amidst worries about Fed independence".
In commodities, oil prices edged lower on concerns the brewing trade war between major crude consumers the US and the European Union will curb fuel demand.
Brent crude futures fell 0.35 per cent, to $68.97 a barrel, while US West Texas Intermediate crude eased 0.31 per cent to $66.99 per barrel.
Asian share markets have held their ground near a four-year peak, buoyed by Wall Street's closing record high ahead of a slate of corporate earnings, while investors take stock of tariff negotiations between the US and its trading partners.
The Japanese markets returned to action after a holiday following a weekend when the ruling coalition suffered a defeat in upper house elections, although Prime Minister Shigeru Ishiba vowed to remain in his post.
Japanese shares briefly jumped at the open on Tuesday before trading modestly higher, while bonds had a muted reaction as the election results were largely priced in and were not as bad as investors had feared.
The yen rallied one per cent on Monday, recouping some of the losses from past weeks and was last little changed at 147.46 per dollar on Tuesday.
Kristina Clifton, an economist at the Commonwealth Bank of Australia, said the weakening of Ishiba's leadership will open the door to more fiscal expansion which is negative for Japanese assets, including the yen.
"The bottom line is longer term Japanese government bond yields and JPY can fall if concerns about Japan's fiscal spending deepen."
MSCI's broadest index of Asia-Pacific shares outside Japan hit its highest level since October 2021 in the early Asian hours but was last little changed. The index is up nearly 16 per cent in 2025.
Overnight, the S&P 500 and the Nasdaq notched record-high closes on Monday, lifted by Alphabet and other megacaps ahead of a burst of earnings reports this week.
Investor focus has been on tariff negotiations ahead of the August 1 deadline with the European Union exploring a broader set of possible countermeasures against the United States as prospects for an acceptable agreement with Washington fade.
The most important deals for the global outlook are with the EU and Japan, CBA's Clifton said.
"The USD reaction to the announcement of trade deals with these countries would depend on the details of the deals in our view," Clifton said, noting the dollar could turn down again against the euro and the British pound.
The euro was steady at $1.1689, after rising 0.5 per cent in the previous session but still away from the near four-year high it touched at the start of July.
The single currency is up 13 per cent in 2025 as investors look for alternatives to US assets bruised by tariff uncertainties.
The dollar index measure against six other key currencies was at 97.905.
The rumblings around the Federal Reserve's independence and whether US President Donald Trump will fire Fed chair Jerome Powell have kept investors on tenterhooks in recent weeks.
Trump appeared near the point of trying to fire Powell last week, but backed off with a nod to the market disruption that would likely follow.
US Treasury Secretary Scott Bessent on Monday said the entire Federal Reserve needed to be examined as an institution and whether it had been successful, further exacerbating worries about the independence of the US central bank.
The Fed is widely expected to hold rates steady in its July meeting but might lower rates later in the year. Market focus will be squarely on Powell's speech later on Tuesday for clues about when the Fed might ease policy.
Goldman Sachs strategists expect the Fed to deliver three consecutive 25-basis-point cuts starting in September, "provided inflation expectations remain in check amidst worries about Fed independence".
In commodities, oil prices edged lower on concerns the brewing trade war between major crude consumers the US and the European Union will curb fuel demand.
Brent crude futures fell 0.35 per cent, to $68.97 a barrel, while US West Texas Intermediate crude eased 0.31 per cent to $66.99 per barrel.
Asian share markets have held their ground near a four-year peak, buoyed by Wall Street's closing record high ahead of a slate of corporate earnings, while investors take stock of tariff negotiations between the US and its trading partners.
The Japanese markets returned to action after a holiday following a weekend when the ruling coalition suffered a defeat in upper house elections, although Prime Minister Shigeru Ishiba vowed to remain in his post.
Japanese shares briefly jumped at the open on Tuesday before trading modestly higher, while bonds had a muted reaction as the election results were largely priced in and were not as bad as investors had feared.
The yen rallied one per cent on Monday, recouping some of the losses from past weeks and was last little changed at 147.46 per dollar on Tuesday.
Kristina Clifton, an economist at the Commonwealth Bank of Australia, said the weakening of Ishiba's leadership will open the door to more fiscal expansion which is negative for Japanese assets, including the yen.
"The bottom line is longer term Japanese government bond yields and JPY can fall if concerns about Japan's fiscal spending deepen."
MSCI's broadest index of Asia-Pacific shares outside Japan hit its highest level since October 2021 in the early Asian hours but was last little changed. The index is up nearly 16 per cent in 2025.
Overnight, the S&P 500 and the Nasdaq notched record-high closes on Monday, lifted by Alphabet and other megacaps ahead of a burst of earnings reports this week.
Investor focus has been on tariff negotiations ahead of the August 1 deadline with the European Union exploring a broader set of possible countermeasures against the United States as prospects for an acceptable agreement with Washington fade.
The most important deals for the global outlook are with the EU and Japan, CBA's Clifton said.
"The USD reaction to the announcement of trade deals with these countries would depend on the details of the deals in our view," Clifton said, noting the dollar could turn down again against the euro and the British pound.
The euro was steady at $1.1689, after rising 0.5 per cent in the previous session but still away from the near four-year high it touched at the start of July.
The single currency is up 13 per cent in 2025 as investors look for alternatives to US assets bruised by tariff uncertainties.
The dollar index measure against six other key currencies was at 97.905.
The rumblings around the Federal Reserve's independence and whether US President Donald Trump will fire Fed chair Jerome Powell have kept investors on tenterhooks in recent weeks.
Trump appeared near the point of trying to fire Powell last week, but backed off with a nod to the market disruption that would likely follow.
US Treasury Secretary Scott Bessent on Monday said the entire Federal Reserve needed to be examined as an institution and whether it had been successful, further exacerbating worries about the independence of the US central bank.
The Fed is widely expected to hold rates steady in its July meeting but might lower rates later in the year. Market focus will be squarely on Powell's speech later on Tuesday for clues about when the Fed might ease policy.
Goldman Sachs strategists expect the Fed to deliver three consecutive 25-basis-point cuts starting in September, "provided inflation expectations remain in check amidst worries about Fed independence".
In commodities, oil prices edged lower on concerns the brewing trade war between major crude consumers the US and the European Union will curb fuel demand.
Brent crude futures fell 0.35 per cent, to $68.97 a barrel, while US West Texas Intermediate crude eased 0.31 per cent to $66.99 per barrel.