Asian stocks slip, dollar gains as markets brace for crucial week

Reuters

a day ago

TOKYO, July 25 (Reuters) - Asian shares eased from highs on Friday, with Japan retreating from a record, as investors locked in profits ahead of a bumper week that includes U.S. President Donald Trump's tariff deadline and a host of central bank meetings.
The dollar gained against major peers after bouncing off a two-week low on Thursday, helped by some firm U.S. economic data.
Japan's currency, in particular, was weighed by political uncertainty amid media reports Prime Minister Shigeru Ishiba will step down. Benchmark Japanese government bond yields hovered just below the highest since 2008.
Japan's broad Topix index (.TOPX), opens new tab, which has jumped more than 5% over the previous two sessions to an all-time high, pulled back 0.8%. The Nikkei (.N225), opens new tab slipped 0.9% from Thursday's one-year high.
Hong Kong's Hang Seng (.HSI), opens new tab lost 0.9% and mainland Chinese blue chips (.CSI300), opens new tab declined 0.5%. Australia's equity benchmark (.AXJO), opens new tab eased 0.5%.
At the same time, U.S. S&P 500 futures added 0.2%, after the cash index (.SPX), opens new tab edged up slightly to a record closing high overnight, buoyed by robust earnings from Google parent Alphabet (GOOGL.O), opens new tab. The tech-heavy Nasdaq (.IXIC), opens new tab also marked a record high.
MSCI's gauge of stocks across the globe (.MIWD00000PUS), opens new tab edged down 0.2%, but remained just below an all-time peak from Thursday. The index is on course for a 1.3% weekly advance, buoyed in large part by optimism for U.S. trade deals with the European Union and China, following an agreement with Japan this week.
"Trade agreements will help mitigate some of the downside risks to the global economic outlook. However, while the global tariff rate looks likely to be lower than previously feared, it will likely settle at a much higher level than it was at the end of 2024," Commonwealth Bank of Australia analysts wrote in a client note.
"We expect higher tariff costs to raise U.S. consumer price inflation and dampen overall U.S. economic growth."
Next week - in the U.S. alone - investors contend with Trump's August 1 deadline for trade deals, a Federal Reserve policy meeting, the closely watched monthly payrolls report, and earnings from the likes of Amazon, Apple, Meta and Microsoft.
The Bank of Japan has its own policy announcement on Thursday, and Prime Minister Ishiba's Liberal Democratic Party holds a meeting the same day.
That's after the European Central Bank held rates steady on Thursday, pausing its easing campaign as it waits to assess any impact from U.S. tariffs.
The euro ended the session down 0.2% against a buoyant dollar and was little changed on Friday at $1.1744 .
The U.S. currency advanced 0.1% to 147.10 yen , adding to Thursday's 0.4% gain.
Trump kept the pressure on Fed Chair Jerome Powell to cut rates after a rare presidential visit to the central bank on Thursday, although he said he did not intend to fire Powell, as he has frequently suggested he would.
"While growth is possibly a bit lumpy, there's little evidence for the need for immediate rate cuts from the Fed," said Kyle Rodda, senior financial markets analyst at Capital.com.
U.S. 10-year Treasury yields edged down to 4.39% on Friday, effectively erasing an advance on Thursday.
Equivalent Japanese government bond yields eased 1 basis point to 1.59%, just off this week's high of 1.6%, a level last seen in October 2008.
JGB yields have been rising on concerns the political scale is tilting more towards fiscal stimulus, after big gains for opposition parties backing consumption tax cuts in Sunday's upper house election. Pressure is building on the more fiscally hawkish Ishiba to quit after his coalition lost its majority in the vote, after doing the same in lower house elections last October.
Gold eased 0.3% to around $3,356 per ounce.
Brent crude futures gained 0.5% to $69.53 a barrel, while U.S. West Texas Intermediate crude futures added 0.5% to $66.36 per barrel.