Asian shares slid midweek as concerns mounted about trade deadlines set by U.S. President Trump. He dismissed the idea of extending the July 9 deadline for countries to complete trade deals with the U.S. and cast doubt on the prospects for a deal with Japan, though he was optimistic about India.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.23% from a nine-month peak. Japan's Nikkei fell 0.78%, pressured by tech declines. Markets in Taiwan and South Korea were also lower, following a decline in U.S. tech stocks that followed a powerful rally in June. Traders remained cautious, as the timeline for solid trade agreements appeared too tight to deliver results.
Fed Caution and Tax Bill
Investors are awaiting U.S. job data, expected on Thursday, that could shape the Federal Reserve's next moves. Job openings rose in May, suggesting a strong labor market. But when Fed Chair Jerome Powell said that the Fed would "wait and learn" about the economy before cutting rates.
Traders are now pricing in 64 basis points of rate cuts this year, but only 21% chance of a move next month. On Thursday, Trump's huge tax and spending bill cleared the Senate and is heading to the House. Even though the bill would increase U.S. debt by $3.3 trillion, the market's reaction was calm, with yields on 10-year Treasuries sticking at 4.245%.
Dollar Under Pressure
The dollar fell further, remaining close to a 3.5-year low. The euro was close to $1.1799, and the yen was steady at 143.52. The U.S. dollar index was little changed near 96.65—its weakest since March 2022. Investors have been cautious on U.S. assets, concerned about the debt burden and policy unpredictability.
Gold, a safe haven, eased slightly to $3,332.19 an ounce but is up 27% for the year. Spot gold rose 1% on Monday. Oil markets were relatively subdued as traders awaited more visible signs of supply and demand scenario.
