Asian share markets opened the week mostly higher on Monday as Wall Street futures climbed and a retreat in oil helped ease inflation worries. Market participants are gearing up for an earnings season that could spotlight gains in technology and chipmakers, while macro updates and central bank signals remain in investors' sights.
There were no fresh breakthroughs in the tense U.S.-Iran diplomacy, but maritime traffic continued through the Strait of Hormuz, with 160 vessels reported to have transited from Monday to Saturday last week. Meanwhile, OPEC+ agreed to raise output targets by 188,000 barrels per day from August, adding to similar increases already scheduled for June and July. Those supply moves helped push Brent crude down 0.6% to around four-month lows of $71.70 a barrel, while U.S. crude slipped 0.5% to $68.38.
The combination of easing energy costs and a softer-than-expected U.S. payrolls report prompted markets to scale back the probability of a Federal Reserve rate rise in the near term. Futures markets priced in a 78% chance that the Fed will hold rates steady at its July 29 meeting. The minutes from the Fed's previous gathering are due on Wednesday and are expected to shed light on the more hawkish views that emerged among some board members, though those comments predated the recent decline in oil.
"Even if you thought there was a risk the Fed might move soon, I think we’re safe at least for another month," said Richard Yetsenga, head of research at ANZ. "Our view overall still is the Fed won’t do anything, but clearly we’ve been above target on the Fed’s preferred inflation measure for five years," he added. "There is some risk that the Fed just runs out of patience."
Market breadth in Asia reflected the mixed themes. South Korea’s market, which has been a standout this year, added another 2.25% on Monday after cooling slightly last week but remaining up 92% year to date amid strong AI-driven demand and constrained supply that has supported chip prices. Japan’s Nikkei edged down 0.1% while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%.
In Europe, EUROSTOXX 50 futures were flat, DAX futures rose 0.2% and FTSE futures fell 0.2%. In the United States, S&P 500 futures firmed 0.5% and Nasdaq futures climbed 1.4% following a 2.1% gain for the technology-heavy index last week.
Investor attention is shifting toward corporate earnings, where traders expect the AI-related demand surge to produce outsized profits among tech companies. This week offers a light slate of corporate previews with Delta Air Lines and PepsiCo releasing results, while Samsung Electronics is due to report on Tuesday. Analysts are anticipating a dramatic jump in Samsung’s profitability, with an LSEG SmartEstimate pointing to an operating profit of 86 trillion won for the April to June quarter, equivalent to $56.35 billion, and forecasts of an 18-fold rise in profits.
"Profit bonanza for chipmakers" has become a common refrain as memory-chip demand strengthens. The LSEG estimate underscores expectations for the world’s largest memory chipmaker by sales to deliver a remarkable quarterly result.
Economic data and central bank developments remain on the calendar. The U.S. ISM Services survey is due later on Monday, with forecasts centering on a modest pullback to a still-healthy reading of 54.0 for June. A group of central bankers will speak at a European Central Bank conference in Paris, including Fed Board Governor Christopher Waller and ECB President Christine Lagarde.
New Zealand’s central bank meets on Wednesday, and markets are pricing in a quarter-point increase to its 2.25% cash rate, a move that would be the first hike since mid-2023. That expectation, however, was formed before the recent decline in oil prices, leaving a chance the central bank could surprise by holding rates steady.
Currency and commodity markets were mixed. The dollar index stabilized at 100.880 after weakening in the wake of the disappointing June payrolls report. The euro was flat at $1.1445, just above a recent 13-month low of $1.1325. The dollar traded at 161.45 yen, close to 40-year peaks of 162.84 as market participants remain alert to possible Japanese intervention. Gold was little changed around $4,177 an ounce after a 2% rebound last week.
With central bank minutes and corporate earnings looming, market participants are weighing data and profit narratives that could set direction for risk assets in the near term.