Asian shares make cautious gains as beaten-down Treasuries find support
SYDNEY: Asian shares made some tentative gains on Friday as beaten-down Treasuries found buyers after U.S. President Donald Trump's tax bill narrowly passed the lower house, although debt worries still lingered.
Overnight, PMI data around the globe showed U.S. business activity picked up pace in May, which helped Wall Street rise earlier in the session before running into selling pressures and closing the day largely flat. In contrast, disappointingly weak activity in Europe dragged shares there lower.
Nasdaq futures and S&P 500 futures both were flat.
The Republican-controlled U.S. House voted by a slim margin to pass Trump's tax cut bill, which would fulfil many of his campaign pledges, but will increase the $36.2 trillion U.S. debt pile by $3.8 trillion over the next decade.
Treasury yields, especially at the longer-dated end, have climbed on worries about U.S. fiscal health in the run-up to the passage of the bill. That was exacerbated by the decision from Moody's last week to downgrade the U.S. credit rating, citing rising debt.
The 30-year bonds, however, did manage to find some buyers overnight with prices now at some attractive levels. Their yields fell another 1 basis point to 5.037% on Friday, having dropped 4 bps to pull away from a 19-month top of 5.161% earlier in the session.
"Maybe the certainty of getting something through has been enough to alleviate some of the fear, panic in the market, but as well as that, it is not unusual in big moves for there to be a bit of overshoot," said Ken Crompton, senior interest rate strategist at the National Australia Bank.
"There is certainly nothing in this market move or the passage of this version of the bill that tells me there is going to be meaningful reductions in U.S. bond issuance or this broader concern about global bond supply."
In Asia, yields on super-long Japanese government bonds (JGBs) held near all-time highs on Friday. The 30-year yields have jumped 23 basis points this week and were last at 3.175%, which is being monitored closely by the Bank of Japan.
The MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1% on Friday but for the week it is still set for a loss of 0.4% after five weeks of gains.
Chinese blue chips and Hong Kong's Hang Seng were largely flat.
Japan's Nikkei rose 1% as data showed Japan's core inflation accelerated at its fastest annual pace in more than two years in April.
In the currency market, the dollar was on the back foot again and is headed for a weekly drop of 1.2% against its major peers. The euro is set for the first weekly rise after four weeks of declines, and was up 0.2% on Friday at $1.1302.
U.S. Federal Reserve Governor Christopher Waller said on Thursday he still sees a path to rate cuts later this year, but noted that the outlook depends on where Trump's tariff policy settles.
Bitcoin is set for a weekly gain of 7% at $111,524, having touched a record high of $111,965 just on Thursday.
Oil prices fell for a fourth straight session on the prospects of further output increases by OPEC+ countries. U.S. crude futures dropped 0.7% to $60.76 a barrel and were down 2.7% for the week.
Brent fell 0.6% at $64.03 per barrel.
In precious metals, gold prices were flat at $3,292 an ounce, but were set for a weekly gain of 2.8%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Khaleej Times
34 minutes ago
- Khaleej Times
Students 'great ideas' to boost UAE-US ties, says top official
Students in the UAE — the next generation of innovators and entrepreneurs — are set to play a pivotal role in strengthening the strategic partnership between UAE and the United States, said Martina Strong, US Ambassador to the UAE, during a recent event in Dubai. Her remarks pointed at the importance of youth engagement and cross-border innovation as critical elements in advancing UAE-US bilateral cooperation across future-focused sectors. Speaking at a ceremony that honoured students for their entrepreneurial achievements, Strong highlighted the enduring and evolving partnership between the two nations. 'We are at the core very entrepreneurial, very pioneering as nations, as people, as companies, as private sectors and I think that aligns us so well as partners in so many different fields,' she said. According to Wam, the UAE is already home to more than 1,800 American companies, and this number is expected to grow due to the positive impact of the visit. The Injaz event, which celebrated youth-led innovation, came just weeks after US President Donald Trump concluded his historic visit to the UAE, the final leg of his Gulf tour following stops in Saudi Arabia and Qatar. Speaking at the event, Strong said: 'As many of you know, we had a big visit just a couple of weeks ago here. President Trump came to Abu Dhabi. It was a historic visit…an amazing visit. I hope that those of you who watched it on TV got a sense of the excitement and energy that this visit generated, but it was also very substantive.' Trump arrived in Abu Dhabi on May 15 and was officially welcomed by UAE President Sheikh Mohamed bin Zayed Al Nahyan. The ceremony also included members of the community, such as outstanding students from space camps, astronauts, and space mission engineers. During his meeting with Sheikh Mohamed, Trump underscored the strong and enduring partnership between the US and the UAE. The visiting President later toured the Sheikh Zayed Grand Mosque with Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan. Notably, the visit marked the first by a US president to the UAE since 2008. Students to propel partnership Strong noted that the discussions between the two leaders focused on long-term mutual gains. 'It should not surprise you that the two presidents, US President Trump and UAE President Sheikh Mohamed, focused on our shared prosperity as kind of a key pillar of our bilateral partnership going forward,' she said. UAE announced a $1.4 trillion investment in artificial intelligence in the US and expressed the country's desire to collaborate with the US in promoting global peace and stability. 'They talked about all of the major fields in which we are working together, from artificial intelligence and frontier technology to energy, space exploration, health, life sciences. It's a very, long list,' Strong added. 'But suffice it to say that the two presidents charted a very ambitious path forward … and as I thought about who is going to get all this work done, I think I know it's going to be all of you (students) and your great work, your great ideas, innovation, creativity that will propel our partnership forward in the years ahead.' Reaffirming the US mission's commitment to supporting youth innovation, Strong added, 'The US mission is truly proud to support entrepreneurship among our young generations because it advances our shared objective, and that objective is prosperity for today and for years and decades to come. This is generated through economic growth, through innovation, cooperation and partnerships and really taking advantage of the opportunities.'
Zawya
an hour ago
- Zawya
Global economy's 'sugar rush' defies trade drama
FRANKFURT - For all the drama surrounding U.S. President Donald Trump's trade tariffs, the world economy is holding up better than many had expected. The latest data from the United States, China and, to a lesser extent, Europe are showing resilience and the global economy as a whole is still expected to grow modestly this year. This is in part due to U.S. buyers and foreign sellers bringing forward business while many of the import duties unveiled by U.S. President Donald Trump remain suspended. While that effect may prove short-lived, Trump's decision to pause tariffs and some glimpses of progress in trade talks, particularly between the United States and the European Union, have fuelled cautious optimism. "We are seeing a bit of a sugar rush in industry, with manufacturers bringing forward production and trade," said Holger Schmieding, an economist at investment bank Berenberg. "The other thing is that we have evidence that Trump pedalled back on tariffs. The bet in markets and to some extent in the economy is that he barks but doesn't bite." Investment banks and institutions generally expect the United States to avoid a recession this year and the global economy to keep growing. The International Monetary Fund downgraded its global GDP growth forecast by just 0.5 percentage points last month to 2.8%. This is roughly in line with the trend over the past decade and a far cry from the downturns experienced during the COVID-19 pandemic, the 2008 financial crisis or even the turmoil that followed the 9/11 terror attacks in 2001. No one is venturing a prediction on where the trade negotiations will eventually settle, particularly with a U.S. president who sees himself as unstoppable. This week alone, separate U.S. courts first blocked and then reinstated Trump's tariffs - creating a degree of legal uncertainty that will do little to facilitate trade deals between the United States and those threatened with the levies. While the EU celebrated "new impetus" in its trade talks with the United States, negotiations with China were "a bit stalled" according to U.S. Treasury Secretary Scott Bessent. Companies are counting the cost of the ongoing impasse. A Reuters analysis of corporate disclosures shows Trump's trade war had cost companies more than $34 billion in lost sales and higher costs, a toll that is expected to rise as ongoing uncertainty over tariffs paralyses decision making at some of the world's largest companies. Car-makers from Japan's Toyota to Germany's Porsche and Mercedes-Benz are bracing for lower, or lower-than-previously expected profits if they have not given up making predictions altogether, like Volvo Cars and Dutch-based Stellantis. This is likely to result in a hit especially for Japan. The United States is Japan's biggest export destination, accounting for 21 trillion yen ($146.16 billion) worth of goods, with automobiles representing roughly 28% of the total. "While the worst shocks may be over, there's still a lot up in the air," Xingchen Yu, a strategist at UBS's Chief Investment Office, said. "We don't really know what a new normal for tariffs would look like, unfortunately." PAYBACK But so far the global economy has held up pretty well. China's output and exports are resilient as its companies re-route trade to the United States via third countries. Even in Europe, manufacturing activity was at a 33-month high in May, rebounding from a slump induced by more expensive fuel following Russia's invasion of Ukraine. Confidence was also buttressed by the prospect of greater fiscal spending in Germany, a missing ingredient for European growth for the past couple of decades. The robustness of the world economy has surprised even professional forecasters. A measure produced by U.S. bank Citi that tracks the degree to which global economic data has surprised to the upside is now at its highest in more than a year. Some of that strength circles back to the tariffs themselves and the attempts by U.S. households and businesses to front-load purchases to beat anticipated price increases later this year. U.S. imports were up around 30% in March from where they were in October. The risk to the upbeat outlook comes from the expected "payback" of those advance purchases, which are unlikely to be repeated and will mean slower activity - in the U.S. and elsewhere - later. Economists still fear a triple whammy in which the front-loaded boost to the goods sector is unwound while U.S. household purchasing power is squeezed by higher prices and companies put off investment and hiring. At the margin, however, this scenario is starting to appear a little less likely after Trump's pause on tariffs. "The balance has slightly shifted towards more optimism, albeit with uncertainty and volatility," ING's global head of macro Carsten Brzeski said. ($1 = 143.6800 yen) (Additional reporting by Dan Burns in Washington, Claire Fu in Singapore, Ellen Zhang in Beijing and Leika Kihara in Tokyo; Editing by Mark John and Jane Merriman)
Zawya
an hour ago
- Zawya
Dubai's Emaar has sufficient liquidity to cover $1.3bln debt maturities by 2026: Moody's
DEBT Solid demand expected over next 12 months to balance expected residential property deliveries PHOTO Dubai-listed Emaar Properties has sufficient liquidity to cover debt maturities of 4.8 billion UAE dirhams ($1.3 billion) through June 2026, according to a report by Moody's Ratings. The company's liquidity is excellent, with a cash balance of 25.4 billion UAE dirhams ($7 billion) as of 31 March 2025 (excluding restricted cash in escrow accounts) and undrawn revolving credit facilities of AED 7.4 billion ($ 2 billion), the rating agency said. However, a material portion of Emaar's cash is restricted as a regulatory requirement to deposit customer installments linked to development projects in escrow accounts (AED 32.9 billion out of AED 58.3 billion as of March 2025). Emaar's cash profit is released from these accounts as contractors get paid through the escrow accounts and projects get delivered, the report said. Moody's expects Dubai's real estate market to remain stable over the next 12 to 18 months, following a period of significant growth. Average residential property prices rose by approximately 78 percent, driven by robust housing demand between September 2020 and April 2025. The surge has been supported by a steady influx of expatriates contributing to population growth, positive investor and high-net-worth individual sentiment and strong local consumption amid improved economic conditions. "We expect solid demand over the next 12 months to balance expected residential property deliveries, resulting in a more normalised average residential property price growth rate," Moody's said. The rating agency has upgraded Emaar's long-term issuer ratings to Baa1 from Baa2. It has also upgraded Emaar Sukuk Limited's backed senior unsecured bonds to Baa1 from Baa2 and backed senior unsecured medium-term note programme to (P)Baa1 from (P)Baa2. The outlook remains stable for both entities, the report said. (Writing by P Deol; Editing by Anoop Menon) ( Subscribe to our Projects' PULSE newsletter that brings you trustworthy news, updates and insights on project activities, developments, and partnerships across sectors in the Middle East and Africa. Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
