Most Asian share indexes edge up, dollar struggles for direction
European stocks are bracing for a higher open, with EUROSTOXX 50 futures up 0.5 per cent. Wegovy-maker Novo Nordisk reported second-quarter sales growth of 18 per cent, below initial analyst expectations.
Wall Street futures recovered from an earlier dip, with Nasdaq futures up 0.3 per cent and S&P 500 futures rising 0.4 per cent. Shares of AI chip stock Advanced Micro Devices slid 6.6 per cent after the bell on disappointing data centre revenue.
"We see risk assets in a tug-of-war between solid US corporate earnings, powered by the artificial intelligence (AI) theme, and tariffs hurting growth while lifting inflation," said analysts at BlackRock Investment Institute.
"We stay overweight US stocks but get granular while assessing the tariff fallout."
Overnight, US stocks finished lower after the services sector activity unexpectedly flatlined in July. Employment further weakened and input costs climbed by the most in nearly three years, underscoring the impact from President Donald Trump's tariff policy.
While US earnings have been generally upbeat in the second quarter, they are starting to show the impact of tariffs.
Taco Bell parent Yum Brands missed expectations as steep trade duties dented consumer spending, while Caterpillar warned that US tariffs would cost it up to US$1.5 billion this year.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.1 per cent, while Japan's Nikkei gained 0.6 per cent. Australia's resource-heavy shares rose 0.8 per cent.
Both Chinese blue chips and Hong Kong's Hang Seng index were up 0.1 per cent.
Trump on Tuesday said it would announce tariffs on semiconductors and chips in the next week or so, while the US would initially impose a "small tariff" on pharmaceutical imports before increasing it substantially in a year or two.
He also said the US was close to a trade deal with China and that he would meet his Chinese counterpart Xi Jinping before the end of the year if an agreement was struck. However, he threatened to further raise tariffs on goods from India over its Russian oil purchases.
The Reserve Bank of India kept its key interest rate steady at 5.50 per cent on Wednesday, in line with expectations, but the odds of another cut have risen after the steep US tariffs on Indian exports last week.
In currency markets, the dollar consolidated after sliding from two-month highs last Friday on a weak jobs report that had markets price in a near-certain chance of a Fed interest rate cut in September.
The dollar index, which measures the US currency against six counterparts, was flat at 98.73 and little changed this week after Friday's 1.4 per cent fall.
Fed funds futures imply a 94 per cent chance of a rate cut next month, with at least two cuts priced in for this year, according to the CME's FedWatch.
Investors are waiting for Trump's pick to fill a coming vacancy on the Fed Board of Governors. Trump said the decision will be made soon, while ruling out Treasury Secretary Scott Bessent as a contender to replace current chief Jerome Powell, whose term ends in May 2026.
Treasury yields edged up after a US$58 billion auction of three-year notes went poorly, but still hovered near multi-month lows. More supply will hit the market this week with US$42 billion in 10-year notes on Wednesday and US$25 billion in 30-year bonds on Thursday.
Two-year Treasury yields rose 2 basis points to 3.7323 per cent, having risen 3.5 bps overnight, while benchmark 10-year yields ticked up 3 bps to 4.2217 per cent, after holding steady overnight.
In commodity markets, oil prices rose after four straight sessions of declines. US crude rose 0.6 per cent to US$65.57 per barrel, while Brent was at US$68.07 per barrel, up 0.6 per cent.
Trump said on Tuesday he will decide on whether to sanction countries that purchase Russian oil after a meeting with Russian officials scheduled for Wednesday.
Spot gold prices slipped 0.3 per cent to US$3,370 an ounce.
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