Asian shares rise, dollar strengthens ahead of US earnings; JGB yields surge
By Rocky Swift
TOKYO (Reuters) -Asian shares climbed and the dollar held gains on Tuesday as trade talks remained in the spotlight in a week that will see key readings on U.S. inflation and bank earnings.
Oil prices edged lower after U.S. 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% duties on the European Union and Mexico from August 1. Japan is reportedly trying to schedule high-level talks with the U.S. 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 (OTC:NABZY) 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%, after U.S. stocks ended the previous session with meagre gains. Japan’s Nikkei gauge added 0.2%.
The EU accused the U.S. 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 U.S. Treasury Secretary Scott Bessent in Tokyo on Friday, the Yomiuri newspaper reported, ahead of an August 1 deadline before 25% 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%, highest since October 2008, while the 30-year yield hit an all-time high of 3.195%.
Meanwhile, the U.S. 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% year-over-year, according to LSEG data. The outlook has dimmed sharply since the early April forecast of 10.2% growth, before Trump launched his trade war.
Investors are also waiting for U.S. 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 $1.1672.
U.S. crude dipped 0.3% to $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.
In early trades, the pan-region Euro Stoxx 50 futures were up 0.1%, German DAX futures were up 0.1%, and FTSE futures were up 0.2%. U.S. stock futures, the S&P 500 e-minis, were down 0.1%.
Don't miss out on the next big opportunity! Stay ahead of the curve with ProPicks AI – 6 model portfolios fueled by AI stock picks with a stellar performance this year... In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record. With portfolios tailored for Dow stocks, S&P stocks, Tech Stocks, and Mid Cap stocks, you can explore various wealth-building strategies. So if NABZY is on your watchlist, it could be very wise to know whether or not it made the ProPicks AI lists.
