Stocks drift before tech earnings as Fed drama confounds
TSMC, the world's main producer of advanced AI chips, is expected to post a jump in second-quarter profit to record levels, though U.S. tariffs and a strong Taiwan dollar could weigh on its outlook. Profits for streaming giant Netflix , due later on Thursday, are also on investors' radar.
"With Netflix having outperformed the S&P 500 year-to-date by a sizeable 33 percentage points, and the street fully subscribed to the bullish investment case, Netflix will need to blow the lights out with a solid beat and raise," said Chris Weston, head of research at Pepperstone.
MSCI's broadest index of Asia-Pacific shares outside Japan was up just 0.06% and the Nikkei slipped 0.24%.
Canadian retailer Alimentation Couche-Tard said on Wednesday it was withdrawing its $47 billion takeover bid for Seven & i Holdings, citing a lack of constructive engagement by the Japanese retailer.
Shares of Seven & i Holdings fell 9%.
European futures jumped as EUROSTOXX 50 futures rose 0.56% and FTSE and DAX futures added about 0.4% each.
Nasdaq futures and S&P 500 futures fell 0.1% each.
Also dominating the market mood was confusion over Fed Chair Powell's future at the central bank, after initial news that U.S. President Donald Trump was likely to fire Powell soon sent stocks and the dollar sliding.
Trump was quick to deny the reports, restoring some calm to volatile markets, but he kept the door open to the possibility and renewed his criticism of the central bank chief for not lowering interest rates.
"I think the most likely outcome is for Powell to stay on until the end of his term next year. Having said that, this is not the first time, so there are going to be episodes of volatility in the dollar as a result of political noise," said Carlos Casanova, UBP's senior economist for Asia.
The dollar was on a fragile footing on Thursday, after having lost ground overnight on worries that the Fed's independence could come under threat.
The euro was last down 0.17% at $1.1620 while sterling eased 0.13% to $1.3400 after both currencies made gains in the previous session.
The dollar was little changed at 98.49 against a basket of currencies, having lost 0.33% overnight.
U.S. Treasury yields also steadied after falling on Wednesday, due to expectations that Powell's removal could lead to quicker and deeper rate cuts, with the two-year yield last at 3.9022%.
The benchmark 10-year yield was little changed at 4.4673%.
In Japan, yields on government bonds rose on Thursday as investors extended a selloff driven by fiscal concerns ahead of a closely watched upper house election on Sunday. Bond yields move inversely to prices.
"Regardless of the outcome of the election, we are going to see additional fiscal spending coming out of Japan," said UBP's Casanova.
Elsewhere, oil prices rose on Thursday, with Brent crude futures up 0.47% at $68.84 a barrel. U.S. crude futures gained 0.62% to $66.79.
Spot gold dipped 0.15% to $3,341.29 an ounce.
(Reporting by Rae Wee; Editing by Jacqueline Wong)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Khaleej Times
9 minutes ago
- Khaleej Times
Trump announces 'massive' Japan trade deal including 15% tariff
US President Donald Trump announced Tuesday a "massive" trade deal with Japan, cutting a threatened 25-per cent tariff to 15 per cent ahead of an August 1 deadline. Trump has vowed to hit dozens of countries with punitive tariffs if they don't strike a deal with the United States by next month. So far, Trump has only announced pacts with Japan, Britain, Vietnam, the Philippines and Indonesia, while talks continue with other trade partners. "We just completed a massive Deal with Japan, perhaps the largest Deal ever made," Trump said on his Truth Social platform. Stay up to date with the latest news. Follow KT on WhatsApp Channels. Trump said that under the deal, "Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90 per cent of the Profits." He did not provide further details on the unusual investment plan, but said the deal "will create Hundreds of Thousands of Jobs." Japanese imports into the United States were already subject to a 10-percent tariff, which would have risen to 25 per cent on August 1 without a deal. Duties of 25 percent on Japanese autos — an industry accounting for eight percent of Japanese jobs — were also already in place, as well as 50 per cent on steel and aluminum. Japanese Prime Minister Shigeru Ishiba said on Wednesday in Tokyo that the autos levy was cut to 15 per cent. "We are the first (country) in the world to reduce tariffs on automobiles and auto parts, with no limits on volume," he told reporters. "We think it is a great achievement that we were able to get the largest cut (in tariffs) among countries which have trade surpluses with the US," he said. This sent Japanese auto stocks soaring on Wednesday, including Toyota which rocketed more than 12 percent. US-bound shipments of Japanese cars tumbled 26.7 percent in June, stoking fears that Japan could fall into a technical recession. Last year vehicles accounted for around 28 per cent of Japan's 21.3 trillion yen ($142 billion) of exports to the world's biggest economy. To Trump's annoyance, US-made cars sell poorly in Japan, with only hundreds sold annually for the likes of General Motors, compared to millions of Toyotas bought by US motorists. The US president also wanted Japan to increase imports of rice, the price of which has soared in recent months in the Asian giant, and of US oil and gas. Rice imports? But Trump said Tuesday that Japan has agreed to "open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things." Rice imports are a sensitive issue in Japan, and Ishiba's government -- which lost its upper house majority in elections on Sunday -- had previously ruled out any concessions. Ishiba, whose future is uncertain following the election, said on Wednesday that the deal does not sacrifice Japan's agricultural sector. Trump has been under pressure to wrap up trade pacts after promising a flurry of deals ahead of his August 1 tariff deadline. Earlier on Tuesday, he announced a deal had been reached with the Philippines which would see the country face 19 per cent tariffs on its exports. The White House also laid out details of a deal with Indonesia, which would see it ease critical mineral export restrictions and also face a 19 per cent tariff, down from a threatened 32 per cent. Indonesian goods deemed to have been transshipped to avoid higher duties elsewhere, however, will be tariffed at 40 per cent, a US official told reporters Tuesday. After an escalatory tit-for-tat with China, the two major economies agreed to a temporary lowering of tariffs, with another round of negotiations expected next week in Stockholm. Since returning to the White House in January, Trump has imposed a sweeping 10 percent tariff on allies and competitors alike, alongside steeper levels on steel, aluminum and autos. Legal challenges to Trump's non-sectoral tariffs are ongoing.
Zawya
40 minutes ago
- Zawya
Dollar holds losses after Trump announces Japan trade deal
TOKYO: The dollar stayed weak on Wednesday, having lost ground overnight, after U.S. President Donald Trump announced a trade deal with Japan ahead of an impending tariff deadline. The U.S. currency has been one of the biggest losers since Trump announced sweeping tariffs on trading partners on April 2, only to delay and suspend most of the duties as his administration sought bilateral trade deals. The yen flipped to losses on the day after a report that Japanese Prime Minister Shigeru Ishiba intends to step down next month. In a post on Truth Social, Trump said that a tariff rate of 15% was set on imports from Japan, down from the 25% rate that was expected to take effect from August 1, and added the Asian nation will invest $550 billion in the United States. "Dollar softness seems to be our opening proposition," said Michael McCarthy, Market Strategist at Moomoo Australia. "Clearly there's some dovishness infecting the market at the moment around the U.S. dollar and we're seeing that in the bond markets too." The dollar traded at 146.90 yen, up 0.2% after having slid 0.5% in the previous session. The dollar index, which tracks the greenback against major peers, was little changed at 97.48 after a three-day decline. The gauge has lost 6.6% since Trump's "Liberation Day" tariff announcement on April 2. U.S. Treasury Secretary Scott Bessent said on Monday the administration is more concerned with the quality of trade agreements than the timing. Asked whether the deadline could be extended for countries engaged in productive talks with Washington, Bessent said Trump would make that decision. Uncertainty over the eventual state of tariffs globally has been a huge overhang for the foreign exchange market, leaving currencies trading in a tight range for the most part, even as stocks on Wall Street have scaled fresh highs. Japan's all-important auto industry and rice imports were sticking points in protracted trade talks with the U.S. In his post on Truth Social, Trump said Japan would open to trade for U.S. cars, trucks, rice and certain agricultural products, among other items. Ishiba told reporters in Tokyo that the deal would set a 15% tariff on imports of Japanese vehicles. Ishiba, whose ruling coalition lost its majority in upper house elections on Sunday, has made up his mind to announce his resignation by the end of August, the Mainichi newspaper reported. The euro stood at $1.1736, down 0.2%. Sterling was little changed at $1.35180, off 0.1%. Also weighing on investors' minds were worries about Federal Reserve independence, given Trump has repeatedly railed against Chair Jerome Powell and urged him to resign because of the central bank's reluctance to cut interest rates. Bessent on Monday took a softer stance, saying there is no need for Powell to step down immediately, adding that he should see through the end of his term in May if he wants.
Zawya
an hour ago
- Zawya
Nikkei surges in boost to Asia as Trump announces Japan trade deal
SYDNEY: A rally in Japanese shares led Asian markets on Wednesday after President Donald Trump announced a trade deal with Japan and fuelled hopes of more to come, tempering the disappointment from U.S. earnings that highlighted the drag from higher tariffs. Trump late on Tuesday said a trade deal with Tokyo will include Japan paying a lower 15% tariff on shipments to the U.S. It followed an agreement with the Philippines that will see the U.S. collect a 19% tariff rate on imports from there. "Expectations for a breakthrough were low, so Trump's announcement delivers a mild upside surprise — providing near-term relief for Japanese equities," said Charu Chanana, chief investment strategist at Saxo. "Strategically, the deal allows Japan to sidestep immediate tariff escalation, while Trump's attention shifts elsewhere." Japan's Nikkei jumped 2.6% on Wednesday as shares of automakers surged on news the deal lowers the auto tariff to 15%, from a proposed 25%. Mazda Motor rallied 17% while Toyota Motor jumped 11%. Japanese government bonds slid, with the yields for 10-year JGBs up a whopping 8.5 bps at 1.585%, as the reduced uncertainty helped to clear the path for the Bank of Japan to resume interest rate hikes. The reaction in the yen was more muted, eking out a small 0.1% gain to 146.42 per dollar. Traders are on edge as Japanese Prime Minister Shigeru Ishiba was planning to soon decide whether to step down after assessing the outcome of the trade deal, Yomiuri newspaper said. Trump also said representatives from the European Union are coming for trade negotiations on Wednesday. That stirred hopes for a deal with Europe, as markets were worried about broader EU countermeasures amid receding signs of a trade agreement with Washington. EUROSTOXX 50 futures rose 0.8%, while Wall Street futures were up about 0.1%. In another positive development, U.S. and Chinese officials will meet in Stockholm next week to discuss an extension to the August 12 deadline for negotiating a trade deal, Treasury Secretary Scott Bessent said. Chinese blue-chips edged up 0.3% and Hong Kong's Hang Seng index gained 0.5%. MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.6%. Overnight, Wall Street closed mixed as investors assessed a spate of earnings that pointed to signs that Trump's trade war is hitting corporate profit margins. General Motors tumbled 8.1% after the automaker reported a $1 billion hit from tariffs to its quarterly results. Shares of RTX dropped 1.6% after the aerospace and defense giant took a hit from tariffs despite strong demand for its engines and aftermarket services. Investors are now waiting for results from Tesla and Google's parent Alphabet - the Magnificent 7 stocks that have driven much of the market rally fuelled by AI optimism. In the foreign exchange market, moves are a little muted with the dollar holding onto overnight losses along with lower Treasury yields. The dollar index was flat at 97.45, having slipped 0.4% overnight for its third straight day of declines. The euro dipped 0.1% to $1.1739 after rising 0.5% overnight. Benchmark 10-year U.S. Treasury yields ticked up 2 basis points to 4.3559%, after slipping 3 bps overnight, as Trump continued to lash out at Federal Reserve Chair Jerome Powell for not cutting interest rates, although Bessent said there was no need for him to step down immediately. Bessent did say the Fed's vital independence on monetary policy is threatened by its "mandate creep" into non-policy areas and he called on the U.S. central bank to conduct an exhaustive review of those operations. Oil prices gained a little on Wednesday. U.S. crude rose 0.4% to $65.60 per barrel, while Brent was at $68.88 per barrel, up 0.4%. Spot gold prices were steady at $3,429 an ounce.
