Asian Stocks Look Sluggish After US Rally Wanes: Markets Wrap
Asian stocks are poised for a muted open after US stocks gave up most of their gains on Monday, with traders looking for signs of resilience in corporate earnings amid tariff risks.
Equity futures pointed to small gains in Hong Kong and Sydney in early trading. Shares in Tokyo, where Prime Minister Shigeru Ishiba said he would carry on as leader even as the ruling coalition lost its majority in the upper house election — looked flat as the city reopens after a public holiday.
While the closed above 6,300 for the first time, the gauge rose just 0.1%. joined a decline in oil. Chipmakers almost erased their advance as slipped. Fellow megacaps and will kick off the group’s earnings season this week. The stakes will again be high as investors look for updates on artificial-intelligence spending.
Gains in Treasuries were led by longer maturities, with the 30-year yield down four basis points to 4.95%. The slid against all of its developed-world peers.
Investors also kept a close eye on tariff headlines. President Donald Trump may issue more unilateral tariff letters before Aug. 1, White House Press Secretary Karoline Leavitt said. More trade deals may also be reached before the deadline, she added.
To Matt Maley at Miller Tabak, it is becoming more evident that the Trump administration is going to be tougher on the tariff issue going forward. So, it’s important to decide whether this is something the stock market is pricing in right now.
“Earnings season will move into full swing this week, and the guidance will be more important than usual,” he said. “This guidance is going to have create a very large increase in earnings estimates if the market is going to reach some of the targets that exist on Wall Street right now.”
Japan’s stock and bond markets will reopen after a national holiday following its election, with government bonds to further selling. The yen strengthened versus the dollar on Monday, after weakening for most of July.
Meanwhile, Philippine President Ferdinand Marcos Jr. will be the latest eager to make a deal before the US-imposed Aug. 1 tariff deadline when he visits President Donald Trump in the Oval Office later Tuesday.
Earnings Season
In the US, the is off to a ripping start, with consumer strength powering resilient corporate profits. Yet after hitting a series of all-time highs, the is trading around 22 times expected 12-month profits, leaving little room for error.
“While stocks may be due for a breather, we believe the bull market remains intact,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “We maintain our June 2026 S&P 500 price target of 6,500, and recommend using volatility as an opportunity to phase into markets.”
Morgan Stanley strategists led by Michael Wilson advise investors to stay bullish on US stocks, as earnings momentum , positive operating leverage and cash tax savings are under-appreciated tailwinds.
Recent dollar weakness should provide a small tailwind to S&P 500 earnings, partially offsetting the tariff earnings pressure, Goldman Sachs Group Inc. strategists led by David Kostin said.
The S&P 500 hasn’t posted a 1% up or down day since late June, and Mark Hackett at Nationwide notes that also remain “suspiciously quiet.”
“This calm is unusual and may reflect both investor fatigue and institutional hesitation to fight the current trend,” he said. “We’re in a window where calm can quickly turn to complacency. While a break in either direction is possible, current positioning suggests we’d bet on a rally before a drop.”
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