2025-07-18 06:04

Asian stock markets: Yen down for second week ahead of Japan upper house election Wall St closes at record highs, Netflix beats street Dollar bounces for the week, Treasury yields slightly lower SYDNEY, July 18 (Reuters) - Asian shares tracked Wall Street higher on Friday as still-strong U.S. economic data and robust corporate earnings offset tariff worries, while the yen headed toward a second successive week of loss ahead of Japan's upper house election. Overnight, the S&P 500 and the Nasdaq again closed at record highs as U.S. data including retail sales and jobless claims beat forecasts, indicating a modest improvement in the economy that should give the Federal Reserve time to gauge the inflation impact from higher U.S. tariffs. Sign up here. Streaming giant Netflix (NFLX.O) , opens new tab beat Wall Street's lofty expectations for second-quarter earnings in part due to a weaker U.S. dollar. Its share price, however, fell 1.8% in after-hours trading, with analysts saying much of the growth had already been priced in. European share markets are set for a higher open, with EUROSTOXX 50 futures 0.4% higher. Wall Street futures , were up 0.2%. On Friday, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab rose 0.7% to its highest since late 2021, bringing the weekly gain to 1.5%. Japan's Nikkei (.N225) , opens new tab, however, slipped 0.2%, and the yen slipped 0.1% to 148.77 per dollar and was down about 0.7% this week after polls showed Prime Minister Shigeru Ishiba's coalition was in danger of losing its majority in the election on Sunday. Data on Friday showed Japan's core inflation slowed in June due to temporary cuts in utility bills but stayed beyond the central bank's 2% target. The rising cost of living, including the soaring price of rice, is among the reasons for Ishiba's declining popularity. "If PM Ishiba decides to resign on an election loss, USDJPY could easily break above 149.7 as it would usher in an initial period of political turbulence," said Jayati Bharadwaj, head of FX strategy at TD Securities. "JPY could reverse the recent dramatic weakness if the ruling coalition wins and is able to make swift progress on a trade deal with Trump." Chinese blue-chips (.CSI300) , opens new tab rose 0.4% while Hong Kong's Hang Seng index (.HSI) , opens new tab gained 0.8%. The Tapei-listed shares of TSMC (2330.TW) , opens new tab, the world's main producer of advanced AI chips, rose 1.3% after posting record quarterly profit, though it said future income might be affected by U.S. tariffs. In the foreign exchange market, U.S. the dollar was on the back foot on Friday, having bounced 0.3% overnight against major peers on the strong economic data. For the week, it is headed for a second successive gain of 0.7%, bouncing further from a 3-1/2 year low hit over two weeks ago. Fed Governor Christopher Waller said on Thursday he continues to believe the central bank should cut interest rates at the end of this month, though most officials who have spoken publicly have signalled no desire to move. Fed funds futures imply next to no chance of a move on July 30, while a September rate cut is just about 62% priced in. Treasury yields were slightly lower in Asia. Benchmark 10-year U.S. Treasury yields slipped 3 basis points to 4.4375%, having moved little overnight. Two-year yields also edged 2 bps lower to 3.8944%. Oil prices extended gains on Friday, after drones strikes on Iraqi Kurdistan oil fields fuelled supply concerns. U.S. crude rose 0.4% to $67.79 per barrel and Brent also rose 0.4% to $69.77 a barrel. They, however, lost about 0.7% for the week. Spot gold prices were steady at $3,337 an ounce but were set for a 0.5% weekly loss. https://www.reuters.com/world/china/global-markets-wrapup-2-2025-07-18/

2025-07-18 05:44

MUMBAI, July 18(Reuters) - The Indian rupee and local equities have been increasingly moving in sync over the past month as muted portfolio flows alongside lingering uncertainty over U.S. tariffs continue to cloud investor sentiment. The rupee's 30-day correlation with the benchmark Nifty 50 index has tightened to 0.66, the highest level since mid-May, pointing to the currency's increased sensitivity to moves in local stocks. Sign up here. On the day, the Nifty 50 (.NSEI) , opens new tab was down about 0.6%, while the rupee dipped to last quote at 86.2025 per U.S. dollar as of 10:50 a.m. IST, down 0.1%. Local equities diverged from regional peers, led by losses in financial stocks. Asian currencies, meanwhile, were trading mixed and the dollar index was little changed at 98.5. Amidst the largely rangebound moves, the rupee's 1-month implied volatility has eased to a near one-month low of 4.2%, while the stock volatility gauge, India VIX (.NIFVIX) , opens new tab, has retreated to 11.6 from around 14 a month earlier. Foreign portfolio flows, a key driver for both the rupee and local stocks, have also been muted, contributing to rangebound price action, a trader at a state-run bank pointed out. Both the local equity and FX markets are "lacking a clear direction right now," said Apurva Swarup, vice president at Shinhan Bank India, referring to the rangebound moves. News on the U.S.-India trade deal would be key to watch, as it could push stocks and the rupee to move out of their prevailing ranges, Swarup added. The United States is very close to a trade deal with India, U.S. President Donald Trump said earlier this week. Country-specific reciprocal tariff rates on exports to the U.S. are slated to go into effect starting August 1. On the day, dollar bids from foreign and local private banks weighed on the rupee, with traders also pointing to heightened demand to buy dollars at the daily reference rate. https://www.reuters.com/world/india/rangebound-patterns-tighten-rupees-correlation-with-indian-stocks-2025-07-18/

2025-07-18 05:34

July 18 (Reuters) - Swiss lift and escalator maker Schindler (SCHP.S) , opens new tab reported a 5.7% drop in its second-quarter sales on Friday due to negative currency exchange effects related to the strong Swiss franc. It posted quarterly revenue of 2.75 billion Swiss francs ($3.43 billion), down from 2.92 billion francs a year earlier, but beat analysts' average forecast of 2.65 billion francs, according to LSEG data. Sign up here. Currency exchange headwinds had a negative impact of 186 million francs on its sales in the first half of the year, the company said in a statement. U.S. President Donald Trump's tariff announcements have driven up the Swiss currency, seen as a safe haven amid global economic turmoil. The franc's value against the U.S. dollar has grown around 12% since the start of the year. As Schindler makes a vast majority of its sales in foreign currencies, this means their value suffers a negative impact when converted into francs. "Notably, our efforts in modernization are paying off, driving solid organic growth at a time of macro-economic uncertainty and severe currency headwinds," CEO Paolo Compagna said. Schindler has focused on digitalization in recent years, a move that it expects to drive growth through enhanced customer loyalty as services become more efficient. The group's modernization business grew strongly in the second quarter while the service unit continued to grow at a steady pace. Orders for new installations were stable overall despite market weakness in China, it said. Schindler's quarterly order intake amounted to 2.93 billion Swiss francs, compared to 2.99 billion francs a year earlier. The company confirmed its full-year guidance for 2025, expecting revenue to grow in a low single-digit percentage in local currencies, with an operating profit margin of around 12%. ($1 = 0.8027 Swiss francs) https://www.reuters.com/markets/europe/schindlers-revenue-falls-q2-beats-market-forecasts-2025-07-18/

2025-07-18 05:21

Ishiba's coalition faces potential loss of upper house majority Election outcome may shift BOJ policy and yen's trajectory, analysts suggest Opposition parties' tax cut plans could steepen JGB yield curve TOKYO, July 18 (Reuters) - Heading into the most consequential Japanese upper house election in memory and a possible defeat for the coalition of Prime Minister Shigeru Ishiba, investors are weighing whether a record sell-off in the nation's debt has further to run. Japanese government bonds (JGBs) plunged this week, sending yields on 30-year debt to an all-time high, while the yen slid to multi-month lows against the U.S. dollar and the euro. Sign up here. Polls have only gotten worse for Ishiba's ruling Liberal Democratic Party and junior coalition partner Komeito in the final run-up to Sunday's vote, where upstart parties campaigning on increased spending and tax cuts are likely to gain seats. These are the main scenarios investors and analysts are considering: The LDP coalition retains its majority Analysts generally say the most bullish case for the JGB market and the yen is if the government can hold on to a majority. The government's overall debt burden, while still the highest in the developed world at about 250% of gross domestic product, is on a declining trend. "It is difficult to conclude that Japan's fiscal condition is on a path of continuous deterioration," said Koichi Fujishiro, an economist at the Dai-ichi Life Research Institute. "Once the upper house election is over, upward pressure on interest rates stemming from expectations of increased fiscal spending may begin to ease." A victory for Ishiba's coalition would likely see a recovery for the JGB market, where an eight-day sell-off sent yields on 30-year debt up 35 basis points (bps) to a record 3.20% on Tuesday. "If this scenario plays out, some of the JGB shorts look vulnerable, as Ishiba is expected to resist talk of debt-financed tax cuts," Standard Chartered analysts said in a note. LDP coalition is weakened, and Ishiba steps aside An increasingly likely outcome is that Ishiba's coalition fails to win the 50 seats needed to retain its upper house majority, forcing it to seek additional partnerships. Among the most likely candidates is the Democratic Party for the People (DPP), which has urged the Bank of Japan to reverse course and again loosen monetary policy. The surge in JGB yields this week was the market pricing in such a scenario, said Takashi Fujiwara, chief fund manager at Resona Asset Management's fixed income investment division. Within the LDP, a leading candidate to replace Ishiba, should he be forced to step down, is Abenomics proponent Sanae Takaichi, who has advocated for a resumption of monetary easing by the BOJ. The resulting political uncertainty from an Ishiba resignation could be a trigger for foreign investors to sell Japanese shares and the yen, according to analysts, with TD predicting the dollar-yen rate could "easily break above" the 200-day moving average of 149.70. For Japanese stocks, though, a sell-off may be temporary, as the overall framework and policies of the LDP are likely to remain intact, said Yugo Tsuboi, the chief strategist at Daiwa Securities. On the contrary, "if Ishiba stays, that's negative for stocks, because political uncertainties will remain, which the market doesn't like," Tsuboi said. Outsider parties make major gains Analysts say that a strong showing by outsider parties on Sunday would be the most disruptive to Japan's markets. All three leading opposition parties back some form of consumption tax cuts, with the populist, right-wing Sanseito proposing a phase-out of VAT altogether. "If the DPP and Sanseito, which are calling for an increase in JGB issuance, fare even better than in the polls, we could see even further bear-steepening," Barclays analysts wrote in a note, referring to a sharper rise in longer-dated bond yields than shorter-dated ones. They estimate that a 5 percentage point cut to Japan's sales tax, currently at 10%, would lead to a 15-20 basis point increase in the 30-year yield. A coalition government of opposition parties would be expected to abolish the consumption tax and gasoline levies, paying for it with increased JGBs, Societe Generale's Jin Kenzaki said in a note. The chances of that outcome are only about 10%, Kenzaki wrote, but in such an event, "long-term interest rates will rise significantly from the beginning of the term and remain high." https://www.reuters.com/business/japans-markets-brace-election-impact-jgbs-yen-2025-07-18/

2025-07-18 05:15

Brent, WTI up 0.4% after $1 gain on Thursday Both head for slight weekly decline Drone attacks cut Kurdistan oil output by half Market tightness to stay near-term as seasonal demand supports SINGAPORE, July 18 (Reuters) - Oil prices extended gains on Friday, underpinned by supply concerns following drone attacks on northern Iraqi oilfields and tight market fundamentals amid healthy summer demand. Brent crude futures climbed 29 cents, or 0.40%, to $69.81 a barrel as of 0451 GMT, U.S. West Texas Intermediate crude futures advanced 27 cents, or 0.42%, to $67.81 a barrel. Sign up here. Four days of drone attacks on oilfields in Iraqi Kurdistan that shut down half the region's output have supported prices, pushing both contracts up $1 on Thursday. Additionally, seasonal travel demand has propped up the market. In the first two weeks of July, global oil demand has averaged 105.2 million barrels per day (bpd), up by 600,000 bpd from a year earlier and largely in line with forecast, JPMorgan analysts said in a research note. "Crude prices have been broadly stable this week, with no significant moves as the impact of OPEC+ supply increases has been offset by strong seasonal demand in the U.S.," said LSEG's analyst Anh Pham. U.S. crude inventories fell a larger-than-expected last week as exports rose, government data on Wednesday showed. Demand in Asia also firmed as refineries came back from maintenance amid peak seasonal demand. Near-term oil fundamentals are likely to remain supportive, with the market set to remain fairly tight through this quarter, before becoming better supplied from the last three months of the year, ING analysts said in a note on Friday. Still, the uncertainty around U.S. tariff policy, which appears unlikely to be settled until after August 1, is weighing on the market. Plans by major oil producers to remove output cuts will also add to supply as the seasonal Northern Hemisphere summer demand ends. For this week, both Brent and WTI were down more than 1%. Oil output in the semi-autonomous Kurdistan region has been slashed from about 280,000 bpd to between 140,000 bpd and 150,000 bpd, two energy officials said. Officials pointed to Iran-backed militias as the likely source of attacks this week on the region's oilfields, although no group has claimed responsibility. Despite the attack, Iraq's federal government said on Thursday that Iraqi Kurdistan will resume oil exports through a pipeline to Turkey after a two-year halt. https://www.reuters.com/business/energy/oil-extends-gain-iraq-outages-tight-market-supports-2025-07-18/

2025-07-18 05:06

FTSE 100 outperforming European peers Sterling strength doesn't deter UK stocks Dollar-dominated returns biggest since 2009 LONDON, July 18 (Reuters) - Britain's stock market finally appears to be reversing years of underperformance against the rest of Europe, as a UK/U.S. trade deal, lighter regulation and cheap stocks deliver juicy returns that are starting to attract foreign investors. The FTSE 100 (.FTSE) , opens new tab has gained nearly 10% this year to hit record highs this week, beating the STOXX 600 (.STOXX) , opens new tab, which is up 7.5%. Sign up here. On a year-to-date basis, London's blue-chip index has performed better than its European counterpart for the last six weeks, its longest such stretch since late 2022, when a weak pound beefed up revenues for the export-focused FTSE. This week, the financial regulator said it will roll out new rules to boost Britain's capital markets, while Chancellor Rachel Reeves told the financial industry to paint a less negative picture of UK stocks for would-be retail investors, as she seeks new ways to revive a stagnating economy. For foreign investors, the blue-chip index is already looking appealing given sterling's rally this year, while asset managers say the narrative around the UK is shifting. "We are seeing signs of big asset allocators coming back to the UK," Justin Onuekwusi, chief investment officer at St. James's Place. "I am talking about non-UK endowments, pension funds, asset owners, wealth managers who were all very underweight the UK post-Brexit," he said. In dollar terms, the FTSE-100 is up nearly 18% so far this year, set for the biggest dollar-denominated returns since 2009, compared with a 6% year-to-date gain in the S&P 500 (.SPX) , opens new tab, which has also hit record highs. The pound , up 7% this year against the dollar as investors turn away from U.S. assets in response to heightened U.S. policy uncertainty under U.S. President Donald Trump, acts as a headwind for FTSE constituents, 80% of whom get their revenues from overseas. Yet the index's wealth of large defensive companies, including healthcare, utilities and food retailers, help insulate it against swings in the underlying economy, like drugmaker AstraZeneca (AZN.L) , opens new tab or supermarket chain Tesco (TSCO.L) , opens new tab It also has growth-sensitive resource stocks such as Anglo American (AAL.L) , opens new tab and BP (BP.L) , opens new tab to tap into strength in oil, copper and gold. Britain meanwhile is one of the few economies facing less trade uncertainty with a U.S. trade deal in place. In contrast, the European Union faces the threat of 30% tariffs if there is no agreement by August 1. 'TEA AND BISCUIT' "The UK stock market is the calming cup of tea and biscuit in an uncertain world. There’s nothing fancy on offer, just reliable names that do their job day in, day out," AJ Bell investment analyst Dan Coatsworth said. Valuations for FTSE-100 companies have lagged those elsewhere in Europe for years. The 2016 Brexit vote accelerated that trend, with fewer companies using London to list their shares and fewer cropping up as M&A targets, given the political and economic uncertainty that prevailed at the time. Now the UK market is catching up. The FTSE-100's 12-month forward price-to-earnings ratio of 12.5 is the highest for around five years, compared with 14.11 for the STOXX, the narrowest gap in around 18 months, LSEG data shows. The S&P trades at a ratio of 23, a near-10 point premium to the FTSE, compared with under 2 points 10 years ago. "The relatively poor performance we’ve seen in the UK versus particularly the U.S. over the past two years has begun to unwind. We’re in the foothills of that," Michael Stiasny, head of UK Equities, M&G Investments, said, adding that the UK market has traded at a "significant discount". The pound is close to a four-year high against the dollar, but has weakened against the euro this year , offering a tailwind to the FTSE's big exporters. The EU is Britain's largest trading partner, accounting for 41% of exports in 2024, followed by the United States, with 22%, according to official data. It isn't all rosy. The British economy is flagging, inflation is well above the Bank of England's target of 2% and business activity and employment are slowing. Barclays data shows UK equities have seen a net outflow of $20 billion in 2025, although outflows have almost dried up in the last month, compared with Europe's year-to-date inflow of $13 billion and rapidly slowing inflows. Sebastian Raedler, head of European equity strategy and Bank of America Merrill Lynch, said he felt the FTSE's strong run was a function of the currency and in line with the rest of Europe. "Net-net, the FTSE has mildly outperformed, but I would say in an environment where there are a lot of big stories ... a 2% (out)performance of the UK this year would rank further down the radar from my perspective," he said, referring to the percentage gain in the FTSE in 2025 versus that of the STOXX. https://www.reuters.com/business/finance/foreign-investors-are-warming-londons-unloved-stocks-2025-07-18/