Asian equities opened the week cautiously while US stock futures edged lower, as investors awaited progress on US trade negotiations and signals of further economic stimulus from China before increasing risk exposure.
The MSCI Asia Pacific Index rose 0.6%, supported by gains in Japan’s Topix (+0.8%) and Australia’s S&P/ASX 200 (+0.4%), while Hong Kong’s Hang Seng Index climbed 0.1%. The Shanghai Composite Index showed little movement. Meanwhile, futures for the S&P 500 and Nasdaq 100 each declined 0.6%, suggesting a pause in the US market’s recent four-day rally. European futures were largely unchanged, with Euro Stoxx 50 futures flat.
Investor sentiment remains cautious amid Asia’s busiest earnings week of the season and a series of key economic reports ahead, including the Bank of Japan’s policy decision, US GDP growth figures, and the latest US jobs report. Traders are also weighing expectations that the Federal Reserve could potentially reduce interest rates earlier than previously anticipated.
“The market has become more optimistic recently, but I prefer to stay defensive and focus more on domestic-oriented investments,” said Xin-Yao Ng, a fund manager at Aberdeen Investments in Singapore. “The environment will likely stay highly uncertain and volatile due to ongoing tariff tensions and geopolitical issues.”
Adding to the uncertainty, US President Donald Trump expressed skepticism about further delays to tariff increases, signaling that trade negotiations with several countries remain unresolved. US Treasury Secretary Scott Bessent indicated that the administration is pursuing bilateral trade agreements with 17 nations, excluding China. Beijing is expected to face mounting pressure from elevated US tariffs, currently reaching 145% on Chinese goods.
Despite Trump’s claims of progress, tangible advancements in trade talks remain limited. Christian Keller, head of economics research at Barclays, warned that the ongoing uncertainty could be as damaging as the tariffs themselves, impacting business confidence and heightening recession risks.
Market participants are also closely monitoring corporate earnings, with major technology companies—Apple, Microsoft, Amazon, and Meta Platforms—set to release results this week. Analysts predict that the group, part of the so-called “Magnificent Seven,” will achieve an average 15% profit growth in 2025, even amid trade tensions.
Currency markets remained steady. The Bloomberg Dollar Spot Index was largely unchanged, while the Japanese yen gained 0.1% to 143.50 per dollar. The euro held near $1.1375, and the British pound was little changed at $1.3317. Cryptocurrencies were slightly lower, with Bitcoin slipping 0.1% and Ether down 0.5%.
In bonds, the yield on 10-year US Treasuries rose one basis point to 4.25%. Australia’s 10-year bond yield fell six basis points to 4.17%.
Gold prices declined as much as 1.6%, retracing after a strong rally, with spot gold down 0.8% to $3,292.71 per ounce. Oil prices moved modestly higher, with West Texas Intermediate crude rising 0.6% to $63.42 per barrel, and Brent crude gaining slightly to $66.98.
China’s Finance Minister Lan Fo’an reiterated that the government will implement “more proactive and effective policies” to reach its economic growth targets. Officials also emphasized efforts to maintain market liquidity, pledging to cut banks’ reserve requirements and interest rates as needed.
Meanwhile, in Japan, Toyota Industries Corp. was set to surge to its daily limit amid news that Toyota Motor Corp. Chairman Akio Toyoda proposed a buyout, raising questions about corporate governance within Japan’s largest business group.
Looking ahead, the release of US economic data—including employment figures, GDP growth, and core inflation—will likely influence market direction. Analysts forecast a modest rise in non-farm payrolls and a small dip in inflation, but GDP figures remain uncertain, with some estimates predicting a possible contraction when gold imports are excluded.
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