Asian equities opened the week on a cautious footing as traders weighed corporate earnings, central bank signals and weak global demand data. Despite gains in Japan and India, sentiment was tempered across the region by a firmer dollar, falling Chinese industrial profits, and expectations of higher-for-longer US interest rates.
Tokyo and Mumbai advance, China lags
The Nikkei 225 rose 0.6% in early Monday trading, buoyed by upbeat earnings guidance from Sony and financials. The broader Topix added 0.5%, helped by a rebound in tech stocks after last week’s decline. India’s Nifty 50 was also in positive territory, supported by ongoing foreign inflows and optimism over Q2 GDP growth.
However, China’s markets struggled once again. The Shanghai Composite slipped 0.3% while the Hang Seng in Hong Kong dropped nearly 1%, dragged lower by tech giants and real estate shares. Data released over the weekend showed Chinese industrial profits fell 8.3% year-on-year in June, stoking further concerns over the country’s faltering recovery. Beijing’s limited stimulus actions have failed to reverse deteriorating business sentiment or deflationary pressures.
Currency and commodities movements set the tone
The US dollar strengthened against most major currencies during the Asian session, pushing the yen back above 156 and keeping emerging market currencies under pressure. Oil prices were steady around $83 a barrel for Brent crude, while gold held just below $2,360, supported by lingering geopolitical risk and central bank demand.
Traders are closely watching macroeconomic indicators this week, including eurozone CPI, US labour cost data, and the Federal Reserve’s preferred inflation gauge — the PCE deflator — which could influence expectations for rate moves into autumn.
Eyes on European earnings and US mega-tech
European markets are poised to open slightly lower, with futures pointing to modest declines on the DAX, CAC 40 and FTSE 100. Investors will be digesting results from several heavyweight firms including HSBC, LVMH and BP this week. Analysts are particularly focused on how companies have managed margins in the face of persistent inflation and weak consumer demand.
In the US, futures were flat to slightly lower ahead of a packed week. Apple, Amazon and Alphabet are among the mega-cap tech names reporting Q2 results, and any deviation from high expectations could ripple across markets. Meanwhile, Fed Chair Jerome Powell is scheduled to speak midweek, and markets will look for clarity on how confident the central bank is in containing inflation.
Outlook: cautious optimism amid global divergence
Market sentiment remains mixed, reflecting diverging economic trajectories and policy paths across regions. Asian and European investors are growing wary of soft Chinese data and global manufacturing weakness, while US markets continue to rely on tech momentum and solid employment figures.
With monetary policy still uncertain and geopolitical risks lingering, analysts expect a choppy trading pattern through the remainder of the week, particularly as the July data cycle unfolds. Risk appetite will hinge on earnings quality, inflation signals, and the evolving macro narrative across continents.
REFH – Newshub, 28 July 2025
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