logo
Asian shares edge up on Japan's post-election jump

Asian shares edge up on Japan's post-election jump

ASIAN stocks posted a modest gain with Japanese markets staging a relief rally after Prime Minister Shigeru Ishiba said he would carry on as leader even after the ruling coalition lost its majority in the upper house election.
The MSCI regional stock gauge advanced 0.1% after the S&P 500 index closed above 6,300 for the first time. The Nikkei-225 index in Japan jumped as much as 1.1%, before paring gains. The yen depreciated a touch after gaining as much as 1% Monday. Treasuries rose, with yields on the 10-year dipping for a fifth consecutive day to 4.37%.
Stocks have surged from their slump in April as fund managers lean harder into the rally in risk assets with US stocks pushing to fresh highs, defying persistent trade and geopolitical tensions. The high-octane wager is that while President Donald Trump is threatening to disrupt the economic order anew, he will step back from the brink. That rally faces a key test this week as megacaps such as Tesla Inc. and Alphabet Inc. report earnings.
'Earnings season will move into full swing this week, and the guidance will be more important than usual,' said Matt Maley, chief market strategist at Miller Tabak. 'This guidance is going to have to create a very large increase in earnings estimates if the market is going to reach some of the targets that exist on Wall Street right now.'
Investors also kept a close eye on tariff headlines Monday. Trump may issue more unilateral tariff letters before Aug. 1, White House Press Secretary Karoline Leavitt said. More trade deals may also be reached before the deadline, she added.
Meanwhile, Philippine President Ferdinand Marcos Jr. will be the latest foreign leader eager to make a deal before the US-imposed Aug. 1 tariff deadline when he visits Trump in the Oval Office later Tuesday.
Market participants are focused on the performance of Japanese markets as investors weigh policy uncertainty after the ruling Liberal Democratic Party's historic loss in Sunday's elections.
With the election out of the way, 'the possibility of a 'sell Japan' trend, due to worries over extreme fiscal spending, has lessened,' supporting stock prices, said Hideyuki Ishiguro, chief strategist at Nomura Asset Management. However, uncertainty around the new political landscape is likely to cap gains, he said.
Japanese government bonds are vulnerable to further selling following the elections, although the immediate reaction Tuesday was damped by a rally in global debt markets. Benchmark 10-year bonds fell only slightly as trading resumed in Tokyo, pushing yields up by 1.5 basis points.
In the US, the second-quarter earnings season is off to a ripping start, with consumer strength powering resilient corporate profits. Yet after hitting a series of all-time highs, the S&P 500 is trading around 22 times expected 12-month profits.
'While stocks may be due for a breather, we believe the bull market remains intact,' said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. 'We maintain our June 2026 S&P 500 price target of 6,500, and recommend using volatility as an opportunity to phase into markets.'
The S&P 500 hasn't posted a 1% up or down day since late June, and Mark Hackett at Nationwide notes that volatility gauges also remain 'suspiciously quiet.'
'This calm is unusual and may reflect both investor fatigue and institutional hesitation to fight the current trend,' he said. 'We're in a window where calm can quickly turn to complacency. While a break in either direction is possible, current positioning suggests we'd bet on a rally before a drop.' –BLOOMBERG
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Trump tariffs leave costly China supply question unanswered; Indonesia among countries deeply affected
Trump tariffs leave costly China supply question unanswered; Indonesia among countries deeply affected

The Star

time4 hours ago

  • The Star

Trump tariffs leave costly China supply question unanswered; Indonesia among countries deeply affected

JAKARTA (Bloomberg): President Donald Trump's recent flurry of trade deals have given Asian exporters some clarity on tariffs, but missing are key details on how to avoid punitive rates that target China's supply chains. Trump unveiled tariffs of 20% for Vietnam and 19% for Indonesia and the Philippines, signaling those are the levels the US will likely settle on for most of Southeast Asia, a region that ships US$352 billion worth of goods annually to the US. He's also threatened to rocket rates up to 40% for products deemed to be transshipped, or re-routed, through those countries - a move largely directed at curbing Chinese goods circumventing higher US tariffs. But still unclear to manufacturers is how the US will calculate and apply local-content requirements, key to how it will determine what constitutes transshipped goods. South-East Asian nations are highly reliant on Chinese components and raw materials, and US firms that source from the region would bear the extra tariff damage. That's left companies, investors and economists facing several unanswered questions about Trump's tariffs that appear aimed at squeezing out Chinese content, according to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore. "Is that raw materials? All raw materials? Above a certain percentage?' she said. "How about parts? What about labor or services? What about investment?' In an agreement with Indonesia last week, the White House said the two countries would negotiate "rules of origin' to ensure a third country wouldn't benefit. The deal with Vietnam earlier this month outlined a higher 40% tariff rate for transshipped goods. And Thai officials, who have yet to secure a deal, detailed that they likely need to boost local content in exports to the US. Missing Details The Trump administration isn't providing much clarity on the matter right now. US officials are still working out details with trading partners and looking at value-based local content requirements, to ensure exports are more than just assembled imported parts, according to a person familiar with the matter, who didn't want to be identified discussing private talks. A senior Trump administration official also said this week that details on the approach to transshipment are expected to be released before Aug. 1, the deadline for when higher US tariffs kick in. Some factories are already adjusting their supply chains to comply with rules that will require more locally-made components in production. Frank Deng, an executive at a Shanghai-based furniture exporter with operations in Vietnam - and which gets about 80% of business from the US - said in an interview his firm is making adjustments as authorities appear to be more strictly enforcing country-of-origin rules. Vietnam has always had specific local content requirements for manufacturers, Deng added, including that a maximum of 30% of the volume of raw materials originates from China, and the value after production in Vietnam must be 40% higher than the imported raw materials. "We've been struggling to meet all the standards so that we can still stay in the game,' Deng said. "But I guess that's the only way to survive now.' For most of Southeast Asia, reducing the amount of Chinese-made components in manufacturing will require a complete overhaul of their supply chains. Estimates from Eurasia Group show that Chinese components make up about 60% to 70% of exports from Southeast Asia - primarily industrial inputs that go into manufacturing assembly. About 15% of the region's exports now head to the US, up about four percentage points from 2018. Local Content The US has become increasingly vigilant about China's ability to bypass US trade tariffs and other restrictions through third countries since Trump's first trade war in 2017. Thailand signaled its frustration over the lack of clarity for how much local content is needed in goods exported to the US to avert transshipment rates, but noted it will likely be much higher than a traditional measure of 40%. "From what we've heard, the required percentage could be significantly higher, perhaps 60%, 70%, or even 80%,' Deputy Prime Minister Pichai Chunhavajira said July 14. "Emerging countries or new production bases are clearly at a disadvantage,' he said, as their manufacturing capabilities are still at an early stage and must rely on other countries for raw goods. Vietnam, Thailand and Malaysia have all taken steps this year to address Trump's concerns, increasing scrutiny of trade that passes through their ports including new rule-of-origin policies that centralize processing and imposing harsh penalties on transshippers. Developing nations may still struggle to enforce Trump's rules or comply with the rules if it means going up against China, their largest trading partner and geopolitical partner. "The reality is it's not enforceable at all,' said Dan Wang, China director at Eurasia Group. "Chinese companies have all kinds of ways to get around it and those other countries have no incentive to enforce those measures, or capacity to collect the data and determine local content.' -- Reports from Patpicha Tanakasempipat, Skylar Woodhouse and Nguyen Dieu Tu Uyen. -- ©2025 Bloomberg L.P.

US drops sanctions on Myanmar junta allies after Trump praise
US drops sanctions on Myanmar junta allies after Trump praise

The Star

time4 hours ago

  • The Star

US drops sanctions on Myanmar junta allies after Trump praise

A trishaw driver rides as his passenger uses an umbrella to cover themselves from the rain in Yangon on July 21, 2025. -- Photo by Sai Aung MAIN / AFP YANGON (AFP): The United States has lifted sanctions on several allies of Myanmar's ruling general and their military-linked firms, a US Treasury notice shows, after the junta chief sent a glowing letter of praise to President Donald Trump. Junta chief Min Aung Hlaing seized power in a 2021 coup, deposing the civilian government and sparking a civil war that has killed thousands, leaving 3.5 million displaced and half the nation in poverty. Two weeks ago, the top general sent a letter to Trump, responding to his threat of tariffs by lauding his presidency with praise, including for shutting down US-funded media outlets covering the conflict. A US Treasury notice on Thursday said sanctions were dropped against KT Services and Logistics, the Myanmar Chemical and Machinery Company, and Suntac Technologies -- as well as their managers. In a statement, a US Treasury Department spokesperson denied there was an "ulterior motive" in the move, although the notice did not provide a reason for the removals. "Anyone suggesting these sanctions were lifted for an ulterior motive is uninformed and peddling a conspiracy theory driven by hatred for President Trump," said the spokesperson, on condition of anonymity. They added that individuals were "regularly added and removed" from the sanctions list "in the ordinary course of business." KT Services and Logistics and its CEO Jonathan Myo Kyaw Thaung were described as junta "cronies" when they were sanctioned in 2022 for leasing Yangon's port from a military firm for $3 million a year. The Myanmar Chemical and Machinery Company and its owner, Aung Hlaing Oo, and Suntac Technologies owner Sit Taing Aung were sanctioned later that year for producing arms, including tanks and mortars. A third Myanmar national, Tin Latt Min -- who the US previously described as owning "various companies that are closely related to the regime" -- was also removed from the sanctions list. Trump sent a letter to junta chief Min Aung Hlaing earlier this month, one among a raft of missives despatched to foreign leaders during his global tariff blitz. The letter -- believed to be Washington's first public recognition of the junta's rule since the coup -- threatened Myanmar with a 40 percent levy unless a trade deal was struck. Min Aung Hlaing responded with a multi-page letter expressing his "sincere appreciation" for Trump's message and praising his "strong leadership". - AFP

Trump struggles to deflect Epstein fallout amid GOP pressure
Trump struggles to deflect Epstein fallout amid GOP pressure

The Sun

time4 hours ago

  • The Sun

Trump struggles to deflect Epstein fallout amid GOP pressure

PRESIDENT Donald Trump's super powers as a public figure have long included the ability to redirect, evade and deny. But the Republican's well-worn methods of changing the subject when a tough topic stings politically are not working as his White House fends off persistent unrest from his usually loyal base about convicted sex offender Jeffrey Epstein and his associates. Trump has scolded reporters, claimed ignorance and offered distractions in an effort to quash questions about Epstein and the suspicions still swirling around the disgraced financier's case years after his 2019 death in prison. The demand for answers has only grown. 'For a president and an administration that's very good at controlling a narrative, this is one that's been harder,' said Republican strategist Erin Maguire, a former Trump campaign spokeswoman. Unlike political crises that dogged Trump's first term, including two impeachments and a probe into alleged campaign collusion with Russia, the people propelling the push for more transparency on Epstein have largely been his supporters, not his political foes. Trump has fed his base with conspiracy theories for years, including the false 'birther' claim that former President Barack Obama was not born in the United States. Trump's advisers fanned conspiracies about Epstein, too, only to declare them moot upon entering office. That has not gone over well with the president's right-leaning base, which has long believed the government was covering up Epstein's ties to the rich and powerful. 'Donald Trump's been running a Ponzi scheme based on propaganda for the better part of a decade and it's finally catching up to him,' said Geoff Duncan, a Republican former lieutenant governor of Georgia and Trump critic. 'The far right element is just dug in. They're hell bent on getting this information out.' The White House has dismissed reporting about Trump's ties to Epstein as 'fake news,' though it has acknowledged his name appears in documents related to the Epstein case. Trump and Epstein were friends for years before falling out. 'The only people who can't seem to shake this story from their one-track minds are the media and Democrats,' said White House spokesman Harrison Fields. Before leaving for a trip to Scotland on Friday, the president again urged people to turn their attention elsewhere. 'People should really focus on how well the country is doing,' Trump told reporters, lamenting that scrutiny was not being given to others in Epstein's orbit. 'They don't talk about them, they talk about me. I have nothing to do with the guy.' THE ART OF DISTRACTION Trump in recent weeks has employed a typical diversion playbook. He chastised a reporter for asking about Epstein in the White House Cabinet Room. He claimed in the Oval Office that he was not paying close attention to the issue. And, with help from Tulsi Gabbard, his director of national intelligence, he explosively accused Obama of treason for how he treated intelligence in 2016 about Russian interference in the U.S. election. On Thursday Trump took his distraction tour to the Federal Reserve, where he tussled with Chair Jerome Powell about construction costs and pressed for lower interest rates. That, said Republican strategist Brad Todd, was more effective than focusing on Obama in 2016, which voters had already litigated by putting Trump back in office. 'The Tulsi Gabbard look backward, I think, is not the way for them to pivot,' Todd said, noting that Trump's trip to the Fed highlighted the issue of economic affordability and taking on a Washington institution. 'If I was him I'd go to the Fed every day until rates are cut.' Democrats have seized on Trump's efforts to move on, sensing a political weakness for the president and divisions in the Republican Party that they can exploit while their own political stock is low in the wake of last year's drubbing at the polls. A Reuters/Ipsos poll this month showed most Americans think Trump's administration is hiding information about Epstein, creating an opportunity for Democrats to press. Trump's supporters and many Democrats are eager to see a release of government files related to Epstein and his case, which the Justice Department initially promised to deliver. 'Yesterday was another example of the Trump folks trying to throw as much stuff against the wall to avoid the Epstein files,' Mark Warner, a Democratic U.S. senator from Virginia, said in a post on X on Thursday about Gabbard's accusations against Obama. Trump allies see the administration's efforts to change topic as a normal part of an all-out-there strategy. 'They are always going at 100 miles an hour. Every department, every cabinet secretary, everybody is out there at full speed blanketing the area with news,' Republican strategist Maguire said. Trump has weathered tougher periods before, and his conservative base, despite its frustration over the files, is largely pleased with Trump's work on immigration and the economy. In a July Reuters/Ipsos poll, 56% of Republican respondents favored the administration's immigration workplace raids, while 24% were opposed and 20% unsure. Pollster Frank Luntz noted that Trump had faced felony convictions and other criminal charges but still won re-election last year. 'We've been in this very same situation several times before and he has escaped every time,' Luntz said. - Reuters

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store