Asian stocks traded cautiously on Thursday as investors remained on edge ahead of major earnings reports from technology giants and amid ongoing uncertainty surrounding the future of US Federal Reserve Chair Jerome Powell.
The MSCI Asia-Pacific Index outside Japan was up just 0.06%, while Japan’s Nikkei slipped 0.24%, reflecting investor hesitation.
Tech Earnings in Focus: TSMC and Netflix
All eyes are on TSMC, the world’s leading manufacturer of advanced AI chips, which is expected to post record Q2 profits. However, US tariffs and a strong Taiwan dollar may cloud its forward outlook.
Meanwhile, Netflix is also under scrutiny as it prepares to release its results later today. With its stock outperforming the S&P 500 by a staggering 33 percentage points year-to-date, investor expectations are sky-high.
“Netflix will need to blow the lights out with a solid beat and raise,” said Chris Weston, Head of Research at Pepperstone.
Fed Drama Rattles Markets
Market anxiety escalated following reports that former US President Donald Trump was considering firing Powell. Although Trump later denied these claims, he did not rule out the possibility and continued to criticize the Fed’s refusal to cut interest rates.
Oil Prices Climb on Strong Demand, Easing Trade Tensions
“I think Powell stays until the end of his term, but political noise will create volatility,” noted Carlos Casanova, Senior Economist at UBP Asia.
Currency and Bond Market Reaction
The US dollar remained fragile on Thursday:
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Euro fell 0.17% to $1.1620
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Pound sterling eased 0.13% to $1.3400
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The Dollar Index remained flat at 98.49, after a 0.33% decline the previous day.
In the bond market:
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US 2-year Treasury yield stood at 3.9022%
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10-year yield was steady at 4.4673%
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Japanese bond yields rose as fiscal concerns grew ahead of the country’s upper house elections, sparking selloffs.
Corporate Shake-Up in Japan
Shares of Seven & i Holdings plunged 9% after Canadian retailer Alimentation Couche-Tard withdrew its $47 billion takeover bid, citing lack of engagement.
Global Futures and Commodities
European futures pointed higher:
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EUROSTOXX 50 up 0.56%
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FTSE & DAX futures gained 0.4% each
US futures, however, edged down:
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Nasdaq and S&P 500 futures fell 0.1% each
In commodities:
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Brent crude rose 0.47% to $68.84
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WTI climbed 0.62% to $66.79
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Spot gold dipped 0.15% to $3,341.29/oz
Market Outlook
As earnings season heats up and geopolitical developments continue to unfold, global markets remain sensitive to central bank dynamics and tech sector performance. While near-term volatility persists, investor sentiment is likely to pivot around macroeconomic data, trade policies, and signals from the Fed.
