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BusinessToday
15 hours ago
- Business
- BusinessToday
Trump Deadline, Dollar Slide Weigh On Asian Markets
Asian equity markets (Photo credit: Asia Fund Managers) Asian equities retreated on Wednesday as markets responded to growing uncertainty over US interest rates and a looming trade deadline set by President Donald Trump. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.23%, pulling back from a November 2021 high reached last week. Japan's Nikkei slumped 0.78%, driven by weakness in tech shares. Tech-heavy indices in Taiwan and South Korea also tracked lower, mirroring a broader sell-off in US technology stocks following a sharp rally in June. Adding to the cautious sentiment was Trump's renewed insistence that the Jul 9 deadline for trade negotiations will not be extended. He expressed doubts over a deal with Japan but remains optimistic about reaching an agreement with India. Meanwhile, investor attention is increasingly shifting to the outcome of the 'One Big Beautiful Bill' Act (OBBBA), which passed the US Senate by a razor-thin margin and now awaits a vote in the House of Representatives. The legislation, expected to expand the national debt by US$3.3 trillion, has sparked fiscal concerns, though market reaction was initially muted. Benchmark US 10-year Treasury yields held steady at 4.245%. Aninda Mitra, Head of Asia Macro Strategy at BNY Investment Institute, said the Bill 'hard wires' fiscal deterioration in the US and added that elevated term premia may persist due to the uncertainty. 'We don't think long-term yields will fall back materially in the 6 to 12-month horizon,' he added. US economic data released Tuesday showed a rise in job openings for May, suggesting a still-resilient labour market. Investors are now closely watching Thursday's payrolls report to assess the likelihood of Federal Reserve rate cuts. Despite pressure from Trump to ease rates immediately, Fed Chair Jerome Powell reiterated the central bank's cautious stance, saying it will 'wait and learn more' about tariff impacts before making any moves. Markets are pricing in 64 basis points of Fed rate cuts this year, though only a 21% chance of a cut in July. This has weakened the US dollar, which is facing its worst first-half performance since the 1970s, down more than 10% year-to-date. The euro traded at US$1.1793, just below its recent three-and-a-half-year high, while the yen was steady at 143.52 per dollar. 'Any disappointing economic data can prompt further dovish repricing of FOMC rate cuts and another round of USD selling,' said Carol Kong, a currency strategist at Commonwealth Bank of Australia. She also warned that developments in OBBBA and trade policy 'have the potential to further weaken the USD if they undermine investor confidence about the US economy'. Reflecting a flight to safety, spot gold edged lower to US$3,332.19 per ounce, after a 1% jump in the previous session. The precious metal has climbed 27% this year amid rising demand for safe-haven assets. Reuters Related
BusinessToday
3 days ago
- Business
- BusinessToday
Tech Rally Lifts Asia Stocks; Dollar Slips Ahead Of US Jobs Data
Asian equity markets (Photo credit: Asia Fund Managers) Asian shares climbed on Monday, powered by unrelenting demand for technology stocks as S&P 500 futures soared to another record high, while the US dollar remained under pressure ahead of key labour market data. The bullish momentum in Wall Street's tech sector driven by megacaps like Nvidia, Alphabet and Amazon, sent Nasdaq futures up 0.3%, and S&P 500 e-minis 0.2% higher. Japan's Nikkei gained 1.0%, South Korea's market added 0.5%, while the MSCI Asia-Pacific index excluding Japan edged up 0.1%. The dollar weakened as investors braced for a softer US nonfarm payrolls report, expected a day earlier due to Friday's holiday. Economists forecast a 110,000 job increase in June with unemployment ticking up to 4.3%, potentially reinforcing expectations of a July rate cut by the Federal Reserve. Michael Feroli, JPMorgan's head of US economics, noted continued job market softening. 'The unemployment rate in June should tick up to 4.3%, with a significant risk of reaching 4.4%,' he said. Markets are currently pricing in 63 basis points of rate cuts this year, with the odds of a July easing standing at 18%—numbers likely to shift on any labour data disappointment. Meanwhile, attention also turned to the slow progress of a US tax and spending bill, with the Congressional Budget Office warning it could add US$3.3 trillion to national debt, raising concerns about foreign appetite for US Treasuries. Despite debt jitters, 10-year Treasury yields held steady at 3.27%, cushioned by the growing prospect of Fed rate cuts. The dollar index dipped to 97.163, as the euro rose to $1.1731, its highest since September 2021 and sterling hovered near $1.3719. Against the yen, the dollar slipped to 144.48 after a 1% weekly loss. James Reilly of Capital Economics highlighted a historic trend. 'The dollar has fallen more so far this year than in any other since 1973,' he said, suggesting further weakness could become self-reinforcing. Fed Chair Jerome Powell is expected to speak at the ECB's Sintra forum on Tuesday, where markets will look for more signals on US monetary policy. In commodities, gold retreated to US$3,266 an ounce, sliding further from April's record US$3,500, while oil prices extended losses. Brent crude fell 55 cents to US$67.22, and US crude dropped 68 cents to US$64.84, amid concern over OPEC+ output plans. Reuters Related
