Stocks Mixed with Trade Talks and Earnings in Focus; Tokyo Reopens with Gains

Asian markets were mixed on Thursday as traders closely monitored earnings reports from major US companies while also keeping a watchful eye on ongoing US trade negotiations, with just over a week remaining before a key deadline for a deal.

Japanese stocks edged higher, and the yen retained its gains after Prime Minister Shigeru Ishiba confirmed he would remain in power, despite a disappointing election result at the weekend.

Investors took a more cautious approach after a largely positive session on Wall Street, where the S&P 500 ended above 6,300 points for the first time and the Nasdaq set yet another record high.

Economic Developments

US Trade Talks and Tariff Concerns:

Markets continued to rally on the expectation that key trading partners would strike agreements with Washington before August 1, thus avoiding President Donald Trump's severe tariffs. Trump stated that several deals were nearly finalised, but only three agreements have been reached so far.

White House Press Secretary Karoline Leavitt confirmed that more agreements could be announced before next Friday. However, she also warned that the president could unveil new unilateral tariffs in that time.

Although Trump’s tariff announcement on April 2 initially rattled global markets, traders have shown more muted reactions to subsequent threats, anticipating that Trump may backtrack again. This optimism has been supported by data indicating that the US economy remains robust despite the growing impact of tariffs on everyday consumers.

Stephen Innes from SPI Asset Management warned that traders might be in for a shock in the coming week.

"The new tariff regime isn't being priced in — full stop," he wrote. "Markets have seen this movie before: tough talk, last-minute extensions, and deal-making in overtime. But this time, Trump isn’t bluffing. He’s already posted: 'No extensions will be granted.'"

Innes cautioned that if the new tariffs — 30% on the EU, 35% on Canada, and 50% on Brazil — go live, there would be no soft landing for the markets, as these rates are politically charged and economically risky.

Stock Performance Across Asia

Hong Kong and Chinese Tech Stocks Lead the Way:

Hong Kong has been the standout performer in Asia this year, with a 25% gain driven by a rally in Chinese technology firms and a fresh influx of capital from mainland investors. The Hang Seng Index continued its upward trajectory, supported by strong performances from Chinese tech stocks.

Meanwhile, Shanghai, Sydney, and Taipei also posted gains.

Other Asian Markets:

Political Impact on Japan’s Stock Market:

In Tokyo, stocks rose as investors returned from a long weekend to news that Prime Minister Ishiba would stay in power despite his ruling coalition’s loss of majority in Japan’s lower house elections on Sunday. This decision came months after a similar setback in the upper house elections. His refusal to step down helped the yen appreciate against the US dollar and other major currencies, although political instability continues to cast a shadow over the government’s tenure.

The yen strengthened to 147.08 on Tuesday before slightly paring those gains, compared with 148.80 on Friday.

Market and Currency Movements:

Christy Tan from Franklin Templeton Institute warned that Ishiba now faces significant political pressure, especially on issues such as inflation, taxes, and trade talks with the US, which could affect the stability of Japan’s economy.

Focus on Earnings Reports

Attention this week has shifted to earnings reports from some of the world’s largest companies, including Tesla, Alphabet (the parent company of Google), General Motors, Intel, and Coca-Cola. While much attention will be placed on these results, investor focus will also be on the guidance provided by these firms, as companies offer their projections in the context of ongoing trade tensions and tariff concerns.

Key Global Market Data (As of 02:30 GMT)

Oil Prices:

As the deadline for trade deals approaches and earnings season continues, global markets remain on edge, balancing optimism around trade agreements with caution about the potential for fresh tariff impositions. The next few days will be crucial in determining the trajectory of both stocks and currencies, especially with earnings reports providing insight into the health of major global companies.