Asian markets were mixed on Wednesday as investors digested the lack of progress in U.S.-China trade negotiations and prepared for key central bank decisions. The MSCI Asia-Pacific index showed early gains but flattened later in the day. Japan’s Nikkei dipped slightly while Australia’s ASX rose modestly. Hong Kong’s Hang Seng Index, however, fell sharply by 1.3%. Meanwhile, European stock futures showed mild optimism ahead of market openings, with Germany’s DAX inching up.
Caution was fueled by the Federal Reserve’s upcoming policy decision, with expectations that rates will remain unchanged. However, some officials hinted at potential rate cuts in the near future depending on inflation outcomes driven by tariffs. According to economists, the Fed may wait until September to cut rates, especially as labor market conditions remain strong. U.S. Treasury yields dropped in anticipation, with 10-year notes falling to their lowest in nearly four weeks.
The unresolved trade dispute between the U.S. and China added further uncertainty. Although both countries have agreed to extend their 90-day truce, no breakthroughs were achieved, and it remains unclear if President Trump will escalate tariffs after the August 1 deadline. India and South Korea also face pressure, with India potentially subject to 20–25% tariffs on exports and South Korean officials scrambling to strike a last-minute deal.
The Bank of Japan is expected to hold rates steady, and markets will closely examine its policy language following progress in a trade deal with the U.S. Meanwhile, oil prices inched higher amid geopolitical tensions involving Russia, adding to inflationary concerns. Brent crude rose slightly to $72.40 per barrel, signaling investor anxiety over supply disruptions.
Corporate earnings results were mixed, further dampening sentiment. UBS beat profit forecasts, while HSBC fell short due to its China exposure. Adidas warned of earnings risks tied to U.S. tariffs. All eyes now turn to upcoming earnings from U.S. tech giants Microsoft and Meta, whose performance could significantly influence global market direction for the rest of the week.
Source: Reuters