Markets in the region had surged last week on better-than-expected U.S. job data. Hong Kong's Hang Seng Index and Japan's Nikkei 225 each gained more than 1% for the week, bolstering regional sentiment after a difficult start to the quarter. That upward pressure carried into this week, fueled by fresh talks in London between senior U.S. and Chinese trade representatives.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.5% on Tuesday. Japan's Nikkei, too, stayed solid, supported by strong corporate earnings and relatively little worrying about political noise from the West. The London trade talks were "productive," the president said, providing a lift for markets. Futures for Nasdaq and the S&P 500 staged modest gains, compounding the support for Asian equities.
On the second day of discussions in London, the meeting included Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer from the U.S., and Vice Premier He Lifeng from China. Critical minerals and stabilizing global supply chains in a move crucial for Asia's export-oriented nations will be on the agenda.
But it wasn't all sunshine and roses. Bond markets were back in focus with investors in Japan. The government floated the possibility of buying back super-long-term bonds, and yields fell in response. The yield on the 10-year Japanese government bond fell to 1.46 percent, and the 30-year yield was five basis points lower at 2.86 percent. This reduction is happening even as traditional buyers, life insurers, have pulled back amid increasing concerns about debt.
Japanese Finance Minister Katsunobu Kato tried to soothe investors by promising balanced debt management. Yet the spike in volatility in the JGB market has raised wider questions about global bond demand as the world begins to inch back from easy-money policies.
The dollar rose in currency trading as traders saw the dollar trying to recover from Monday's drop. It gained 0.45% against the yen to 145.25. The euro fell to $1.1387, as did the pound. Investors are still cautious in the run-up to key U.S. inflation data, anticipated on Wednesday. The numbers are likely to influence the next calls of the Federal Reserve, which has the rate cuts still on the table later in the year.
Crude oil prices, meanwhile, inched higher, with Brent up 0.24% at $67.20 and U.S. crude edging 0.25% higher to $65.45. Spot gold was down 0.5%, a slight pullback from safe-haven assets.
