After a week of volatile signals from the United States and uncertain global data, investor sentiment in Asia sought stability. A week ago, both the Hang Seng and KOSPI were riding strong and registered decent monthly gains. This week started on the same note, which is stable but wary.
Early on Thursday, the MSCI Asia-Pacific index outside Japan was up 0.7%, suggesting relative tranquility across the region. Japan's Nikkei 225, however, fell 0.2% on worries of export volatility and renewed trade uncertainty. The yen was marginally firmer at 142.92 per dollar, while the dollar index was steady at 98.85 following a 0.5% fall in the previous session.
Investors are waiting for central banks around the world, particularly the European Central Bank, to set monetary policy. With the economic backdrop still delicate, any change in tone from European Central Bank President Christine Lagarde could drive overall market direction globally. Investors are also still keen to read whether the RBA flicks to a more hawkish or dovish bias, knowing the U.S. Federal Reserve will also respond to another round of economic data due this week.
The dollar weakened this week when preliminary readings on U.S. jobs and services sectors disappointed, fueling questions about the health of the world's biggest economy. Compounding the uncertainty is the unpredictable Trump administration's sudden tariff shifts. His administration doubled tariffs on imports of steel and aluminum this week, hitting closely allied countries like Canada and Mexico. At the same time, Washington is asking other nations for trade concessions to avoid more general tariffs that are set to go into effect in July.
Asian governments are taking action. Japan dispatched top trade envoy Ryosei Akazawa to Washington for a new round of negotiations. And newly elected Chancellor Friedrich Merz of Germany is also traveling to the U.S. for bilateral trade talks, a sign that fears are growing among European leaders. But the EU said there had been some limited advances in its trade talks with Washington.
Markets are also reacting to commodities data. Gold gave back some of its recent advance, falling 0.1 percent to $3,372.7 an ounce. Oil prices fell on a surprise build in U.S. inventories and news that Saudi Arabia was cutting its July prices for Asian crude buyers. U.S. crude was down 0.2 percent at $62.75 a barrel.
Euro Stoxx 50 futures were unchanged in equity futures, and S&P 500 e-minis were 0.1 percent lower. The Nasdaq was closing the last session up around 0.3%, indicating some appetite for risk-taking on Wall Street despite policy concerns.
