Asia Shares Creep Higher as Dollar Sways With U.S. Trade Winds

By Wayne Cole

SYDNEY (Cryptonesia) - Asian stock markets and the US dollar began the week cautiously amid ongoing uncertainty regarding U.S. trade policies, with a busy schedule of significant economic indicators and key technology company earnings reports scheduled for this week.

Although U.S. President Donald Trump has asserted that advancements have been achieved regarding trade negotiations with China as well as numerous other nations, concrete proof of this remains absent. Treasury Secretary Scott Bessemer also contradicted Trump’s claim on Sunday that discussions about tariffs with China are currently ongoing.

"Uncertainty is just as harmful as the tariffs, negatively impacting the U.S. economy as significantly as it does the global market," stated Christian Keller, who leads economic research at Barclays.

Despite the current earnings season displaying strong figures, numerous businesses might gear up for a period of consolidation until better clarity emerges," he cautioned. "This stance increases the likelihood of an economic downturn.

Initially, trading activity in the market was subdued, with MSCI's comprehensive gauge of Asia-Pacific stocks excluding Japan ticking up marginally by 0.1%. The Japanese Nikkei gained 0.9%, whereas South Korean equities strengthened slightly by 0.2%.

The EUROSTOCC 50 futures gained 0.3%, whereas FTSE futures and DAX futures each climbed by 0.2%.

On the flip side, S&P 500 futures declined by 0.4% during early trading, whereas Nasdaq futures decreased by 0.5%. The S&P index has recovered nearly 12% since hitting bottom on April 8, yet it still stands 10% lower than its highest point. [ .N ]

Corporate profits have largely been encouraging, showing an increase of over 9%. However, Bank of America observed that 64% of firms exceeded expectations on EPS, which is down from 71% in the prior quarter.

Approximately 180 S&P 500 firms, which make up more than 40% of the index’s total worth, will be reporting this week. This group includes major corporations such as Apple, Microsoft, Amazon, and Meta Platforms.

The upcoming week is filled with significant economic updates such as U.S. job numbers, GDP figures, and core inflation rates.

Hiring numbers are anticipated to increase by 135,000, and deflation is projected to occur; however, there remains significant doubt regarding GDP due to an uptick in gold imports which could depress the overall figure. Analysts predict modest yearly growth of around 0.4%, though the Atlanta Fed’s GDPNow model suggests a decline of -0.4%, not accounting for the impact of gold.

DOLLAR HELD HOSTAGE

The employment figure is the fresher data point and will assist in fine-tuning predictions about Federal Reserve actions, as current financial instruments suggest a 64% probability of an interest rate reduction in June along with an expectation for a total decrease of 85 basis points by the end of the year.

Jonas Goltermann, the deputy chief markets economist at Capital Economics, stated, "We anticipate another strong non-farm payrolls report, which would suggest that the Fed might not loosen its monetary policy stance in June as some have anticipated."

If accurate, this could help support the dollar's recovery from its recent three-year low points, he noted.

However, the Trump administration's unorthodox methods in various policy domains may likely result in enduring harm to trust in the U.S. as a secure refuge," he cautioned. "The dollar remains at the mercy of the administration’s caprices.

The dollar index remained stable at 99.695, staying above last week’s low of 97.923, whereas the euro stayed constant at $1.1350, falling short of its peak at $1.15783 recently reached.

Customer pricing information for Germany and the Eurozone, scheduled to be released this week, is anticipated to indicate another decline in overall inflation. This has led experts to predict that the European Central Bank may reduce interest rates once more when they meet in June.

This week, the Bank of Japan is expected to keep interest rates steady at 0.5%. The ongoing economic and trade instability triggered by U.S. tariffs makes further increases unlikely.

The dollar has edged up to 143.65 yen, from last week's seven-month low of 139.89, but remains just over 4% lower for April so far.

Treasuries have likewise stabilized following President Trump’s statement that he wouldn’t attempt to remove Federal Reserve Chairman Jerome Powell, with 10-year yields remaining at 4.235%, down from their peak of 4.592% in April.

The provisional boost in market optimism caused gold to retreat to $3,307 an ounce, down from its record high of $3,500. [GOL/]

Oil prices began the day quietly, under pressure recently due to concerns over a potential global economic downturn and OPEC’s plans to boost production.

Brent rose 13 cents to $66.98 a barrel, while U.S. crude added 7 cents to $63.09 per barrel.

(Reported by Wayne Cole; Edited by Muralikumar Anantharaman)

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