Asian stock markets showed little movement on Wednesday, as investors remained cautious despite positive signs emerging in global trade talks and ahead of tech giant Nvidia's earnings. This follows a mixed session in Asia last week, where Hong Kong's Hang Seng ticked slightly higher, but Chinese blue chips slipped as concerns about the stock market weighed on risk-taking.
The focus is now shifting to tax signals from major economies and what they might mean for markets in Asia.
MSCI's broadest index of Asia-Pacific shares outside Japan barely budged, while Japan's Nikkei eased 0.04% after three straight days of gains. China's CSI300 slumped 0.1%, and Hong Kong's Hang Seng weakened 0.6%, pointing to rising anxiety over overseas bond yields and lingering trade tensions. Market observers in Asia are looking for signals from the U.S. and Europe for clues about what comes next.
Comments from U.S. President Donald Trump soothed nerves. He commended the European Union for being willing to sit down for talks, and he stepped back from an earlier threat to slap a 50% tariff on imports from the EU. Analysts say that this muted stance is providing some relief for investors, even if the uncertainty is still ahead.
George Lagarias, chief economist of auditing and advisory firm Forvis Mazars, said an agreement may be reached between the U.S. and EU because the two trading partners have vast trade in goods.
European markets benefited from a similar burst of optimism. Germany's DAX added 0.3% to its record, led by defense shares. Britain's FTSE and France's CAC 40 rose 0.2 percent. The broader STOXX 600 rose 0.1 percent, as market climbing has been consistent across Europe.
U.S. investors are waiting for Nvidia's earnings report. Nvidia, one of the "Magnificent 7" tech firms, may set the tone for tech stocks more broadly. Analysts are upbeat about the performance, forecasting that revenue will have surged more than 66% to $43.28 billion. Should those expectations be met, it could touch off a market rally.
Yet there are fears over global debt that are darkening the outlook. Yields on bonds rose again, and Japan's 40-year bonds met tepid demand. That lifted the yield 9 basis points to 3.375%. U.S. long-dated bonds also saw some action, with 30-year yields rising to almost 4.98% and 10-year yields rising to 4.47%.
Rising bond yields have raised fresh concerns about the financial health of major economies like the U.S., Japan, and the U.K. Market confidence has also taken a hit after Moody's lowered its outlook on U.S. credit. At the same time, debates continue over new tax laws. "We're seeing whether the U.S. can solve its budget problems by borrowing more than any country ever has," said Lagarias. He warned that if borrowing goes too far, it could have lasting effects on global markets.
The dollar was stable in currency markets, following a 0.6% increase earlier. The euro was unchanged, at $1.1329. The Reserve Bank of New Zealand cut its rates 25 basis points, driving the kiwi dollar 0.3% higher to $0.5969.
