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Yahoo
6 days ago
- Business
- Yahoo
EU and Japan prepare delicate balancing act with US
The EU and Japan are set to underline the virtues of a rules-based economic order when they meet in Tokyo for summit on Wednesday, but the backdrop of tense trade relations with the US is hovering over the shoulders on both sides. The 30th EU–Japan summit comes at a delicate time, as both powers are entangled in tariff disputes with the US. Japan and the EU are already facing 50% US tariffs on their steel and aluminium exports, 25% on cars, and 10% on all other exports. "We share some fundamental principles, such as the need to maintain a predictable and free economic order," a senior EU official said ahead of the summit. During the summit, Commission President Ursula von der Leyen and Japanese Prime Minister Shigeru Ishiba will compare notes on the US measures. The summit comes at a tricky moment for both as they are in the midst of negotiations with the US and are eager to avoid any escalation at all costs. Like the EU, Tokyo maintains a significant trade surplus with the US, $68.4 billion (€58,44 billion), while the EU's surplus with the US stands at €50 billion. If both fail to reach a deal with the Trump administration by 1 August, the US is threatening to raise tariffs to 25% on Japanese imports and up to 30% on those from the EU. 'The US is and will be the most important ally for Japan,' a Japanese official told Euronews. The EU and Japan don't share the same approach to negotiation with the US, however. While the EU is preparing countermeasures (two packages of €21 and €72 billion each), Japan is not planning any retaliation, even if the same Japanese official said that 'all option remains on the table'. 'Japan and the EU have different approaches because they have different market structures and different economies,' the official explained. However insiders from both sides agree that their businesses need predictability. 'The success of the summit will depend on whether the EU and Japan can demonstrate their firm alignment in pursuing the rule-based global trade system in the face of Trump administration policy,' Hibiki Kimura, from the Japanese law firm Nishimura & Asahi, told Euronews, adding: 'Both the EU and Japan need to provide businesses with predictability, but fluctuating tariff plans have introduced the risk of global value chain disruption.' Melden Sie sich an, um Ihr Portfolio aufzurufen.
Yahoo
7 days ago
- Business
- Yahoo
Asian stocks firm as investors look to tariff negotiations, earnings
By Ankur Banerjee SINGAPORE (Reuters) -Asian share markets held their ground near a four-year peak on Tuesday, buoyed by Wall Street's closing record high ahead of a slate of corporate earnings while investors took stock of tariff negotiations between the U.S. and its trading partners. The Japanese markets returned to action after a holiday in the previous session following the weekend's election where 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 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 1% 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 early Asian hours but was last little changed. The index is up nearly 16% this year. 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% in the previous session but still away from the near four-year high it touched at the start of the month. The single currency is up 13% this year as investors look for alternatives to U.S. assets bruised by tariff uncertainties. The dollar index measure against six other key currencies was at 97.905. [FRX/] The rumblings around the Federal Reserve's independence and whether U.S. 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. U.S. 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 U.S. 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 that the brewing trade war between major crude consumers the U.S. and the European Union will curb fuel demand. Brent crude futures fell 0.35%, to $68.97 a barrel, while U.S. West Texas Intermediate crude eased 0.31% to $66.99 per barrel. [O/R]
