Asian stock markets rise, US stock futures also start higher

Yen strengthens amid concerns over Japan's political instability

"Chances of Japanese rate hike by end of October are low"

Despite concerns about Japan's political instability, Asian stock markets and the yen generally maintained an upward trend on the 21st (local time). US stock index futures also opened higher this week ahead of earnings announcements from tech giants such as Alphabet Inc. and Tesla, Inc.

On this day, the Nikkei 225 in Japan lost 0.21%. Korea’s KOSPI gained 0.7%. The Hang Seng Index in Hong Kong rose 0.68% and Shanghai's CSI was up 0.67%.

S&P 500 futures and NASDAQ futures each climbed 0.27%, while the Dow Jones Industrial Average futures rose 0.3%.

The 10-year U.S. Treasury bond yield recorded 4.39%, down by 3 basis points (1bp=0.01%), extending losses to a fourth consecutive session.

Europe’s broad-based STOXX Europe 600 Index traded around the prior Friday’s closing level in the morning. After Stellantis N.V., the world’s second-largest automaker, said it expects a net loss of €2.3 billion (about ₩3,720 billion) for the first half of the year due to the initial impact of US tariffs, shares fell 2.7% and the European automobile sector dropped 0.6%.

The yen at one point appreciated as much as 0.7% against the dollar but pared gains to finish up 0.4% at 148.29 yen per dollar.

Tsuyoshi Ueno, Chief Economist at Nissei Research Institute, said, “From the Bank of Japan’s perspective, if political instability persists, a rate hike becomes difficult and downward pressure on the yen will continue.” While the Bank of Japan (BOJ) is willing to raise rates further, the market sees little chance of such a move before the end of October.

Donald Trump, President of the United States, said several large trade deal announcements were imminent. He also pushed back against reports that Scott Besant, U.S. Secretary of the Treasury, advised that firing Jerome Powell, Chairman of the Federal Reserve Board, would cause a severe market reaction.

Most Federal Reserve Board members, including Jerome Powell, believe there is no need to cut interest rates until the impact of tariffs on inflation becomes clearer. The market hardly expects a rate hike in July and sees the probability of a rate cut at 61% in September and 80% in October.

Last week, angered by Powell’s cautious stance on rate hikes, President Trump threatened to dismiss Powell but eventually backed down. However, markets remain wary about the prospect of a politically motivated appointee pushing for aggressive rate cuts.

Themistocles Fiotakis, a strategist at Barclays, said, “The odds that Powell steps down as Chairman of the Federal Reserve Board are quite low.” He added, “Even if that were to happen, unless the U.S. economic environment justifies a rate cut, other Fed board members are unlikely to vote for lower rates.”

After a record high last week followed by a correction, Bitcoin rose 1.1% to trade at $119,485.06. Ether gained 1.4%, reaching $3,794.05.

In the commodities market, gold gained 0.5% to $3,367 per ounce, while platinum prices surged, hitting their highest level since August 2014 last week.

Brent Crude Oil rose 0.1% to $69.38 per barrel, and West Texas Intermediate (WTI) crude was up 0.2% at $67.50 per barrel.

Contributed by Jungah Kim, guest reporter kja@hankyung.com