SINGAPORE, May 27 (Reuters) - Asian shares showed a slight decline on Tuesday, while U.S. futures experienced an uptick after President Donald Trump announced a delay in his proposed 50% tariffs on European Union shipments. This development had a notable impact on market sentiments, as the dollar was poised to record its fifth consecutive monthly loss.
In Japan, the yields on super-long government bonds decreased early in the trading session, pulling back from the record highs reached in the aftermath of last week's significant selloff. With U.S. markets closed on Monday for a public holiday, trading volumes were thin, leading investors to cling to the optimism stemming from Trump's unexpected reversal regarding the EU tariffs, which has now been pushed back to a July 9 deadline.
In Asia, Nasdaq futures surged by 1.26%, while S&P 500 futures rose by 1.11%. Additionally, FTSE futures gained 0.94%. Market analyst Tony Sycamore from IG noted, "It was a better night for risk assets, following Trump deferring the EU tariffs back to July 9. The main driver for this week will likely be the month-end rebalancing flows, which should start to emerge soon." He also highlighted that Nvidia's upcoming earnings report would be a focal point in market discussions.
This week, investors are keenly watching for insights from speeches by several Federal Reserve policymakers and the U.S. core PCE price index set to be released on Friday. These indicators will provide clues about the future trajectory of U.S. interest rates. Concurrently, a two-day annual conference hosted by the Bank of Japan (BOJ) and its affiliated think tank commenced on Tuesday, with global central bankers gathering in Tokyo to address concerns regarding sluggish economic growth and persistent inflation.
In the currency markets, the dollar struggled to gain traction and was on track for its fifth consecutive month of declines against a basket of currencies, marking the longest losing streak since 2017. The euro was trading near a one-month high at $1.14035, and the Japanese yen appreciated nearly 0.5% to 142.18 per dollar. Analysts attribute the dollar's weakness to Trump's inconsistent trade policies and concerns regarding the deteriorating U.S. deficit outlook, which have negatively affected sentiment towards U.S. assets.
David Meier, an economist at Julius Baer, commented, "A U.S. dollar regime change could be unfolding in the long term after it appears to have peaked recently. Erratic U.S. policymaking, the tense fiscal situation, and substantial external debt, set against the backdrop of the twin deficit, suggest that a weaker dollar is the most likely scenario." As the dollar's safe-haven appeal diminishes, investors are increasingly turning to alternatives such as gold, which has seen prices soar to record highs this year, recently trading 0.28% lower at $3,332.91 an ounce.
In commodity markets, oil prices experienced a slight decline on Tuesday as investors considered the possibility of OPEC+ deciding to further increase crude oil output at their upcoming meeting later this week. Brent crude futures dipped 0.1% to $64.67 per barrel, while U.S. West Texas Intermediate crude fell by 0.16% to $61.43 per barrel.
As the global economic landscape continues to evolve, investors will remain vigilant, monitoring key indicators and market developments that could influence financial strategies moving forward.
