Asia-Pacific markets set for muted open as impact of Trump tariffs on Wall Street's earnings loom
Sunset view of Yarra river and Melbourne skyscrapers business office building with evening skyline in Victoria, Australia. Australia tourism, modern city life, or business finance and economy concept
Prasit Photo | Moment | Getty Images
Asia-Pacific markets were set for a muted open as investors awaited the extent of the impact of U.S. President Donald Trump's tariffs on corporate earnings and economic data expected from Wall Street this week.
Market watchers were also closely monitoring developments surrounding trade deal negotiations between the U.S. and countries in the region.
Australia's benchmark S&P/ASX 200 is set to rise, with futures standing at 8,025, up from the index's Monday close of 7,997.10.
Futures for Hong Kong's Hang Seng index stood at 21,999, pointing to a stronger open compared to the HSI's last close of 21,971.96.
Japanese markets were closed for a public holiday.
U.S. futures were little changed, after all three key benchmarks swung between gains and losses in Monday's choppy session.
Overnight stateside, the S&P 500 inched slightly higher by 0.06% to close at 5,528.75. This is the broad-based index's fifth straight winning day.
Meanwhile, the Nasdaq Composite ticked 0.1% lower and ended at 17,366.13, while the Dow Jones Industrial Average rose 114.09 points, or 0.28%, to settle at 40,227.59.
Four of the so-called "Magnificent Seven" companies — Amazon, Apple, Meta Platforms and Microsoft — came under pressure briefly during the session ahead of their quarterly reports. Apple and Meta Platforms ended the session modestly higher, each up about 0.4%. Microsoft slipped 0.2% while Amazon was off 0.7%.
— CNBC's Sean Conlon and Pia Singh contributed to this report.
Before any trade agreements are reached with India and Japan, "large U.S. companies will likely try to cut idiosyncratic deals with the White House, perpetuating the policy patchwork," holding back investor sentiment and pressuring stock and bond prices, according to a report by Morgan Stanley Wealth Management chief investment officer Lisa Shalett.
Treasury Secretary Scott Bessent's recent remarks regarding the likelihood of trade deals and continued independence at the Federal Reserve notwithstanding, "tariff deal" announcements won't energize markets without a "comprehensive rollback," the strategist wrote. "[W]e are unconvinced that relief will immediately follow" reports of breakthroughs, and bilateral agreements with India and Japan "are still months away, with key summits scheduled for June and October, respectively," Morgan Stanley wrote Monday.
Just as worrying is the credit market, where "the 10- year U.S. Treasury term premium recently surged to a decade-plus high. Curve steepening amid rising odds of a slowdown indicates investor concerns on two critical fronts: stagflation potential and debt sustainability following the ballyhooed tax bill."
The investment bank thinks the U.S. debt ceiling will need to rise by $5 trillion to $10 trillion, the Republican tax cut legislation will increase U.S. debt outstanding by $1 trillion to $4 trillion over the next decade and annual servicing costs on the national debt might double from the most recent $1.1 trillion.
— Scott Schnipper
Jaque Silva | Nurphoto | Getty Images
Megacap technology earnings this week will be pivotal for the market, according to Deutsche Bank.
Meta and Microsoft are both set to report earnings on Wednesday. Apple and Amazon are slated to release results on Thursday.
"It's fair to say that these Mag-7 earnings will go a long way to dictating the tone of the week," Jim Reid, the bank's global head of macro and thematic research, wrote to clients.
— Alex Harring
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