Markets Today: Japan Election Results Add to Yen Uncertainty, Earnings Season Continues and FTSE 100 Hovers at 9000

[Redator]

Asian Market Wrap

Asian stocks and the yen stayed steady on Monday after Japanese elections delivered bad news for the government, but nothing worse than expected. Meanwhile, Wall Street is gearing up for earnings reports from major tech companies.

Most Read: July PMI Week, NZ Inflation and ECB's Rate Decision – Markets Weekly Outlook

Investors are also hoping for progress in trade talks before President Donald Trump's August 1 tariff deadline. US Commerce Secretary Howard Lutnick remains optimistic about reaching a deal with the European Union.

There are also reports that Trump and China's leader Xi Jinping are getting closer to setting up a meeting, though it likely won’t happen until October. In the meantime, European Commission President Ursula von der Leyen is ahead of the game and will meet with Xi on Thursday.

Japan Elections Surprise - Yen Uncertainty Ahead?

In Japan, the ruling coalition lost control of the upper house in Sunday’s election, making it harder for Prime Minister Shigeru Ishiba to stay in power as a tariff deadline approaches.

The issue is that the opposition parties are divided and unlikely to unite as a strong political group. Over the next few weeks, things might become clearer, and we could see a brief rise in the USD/JPY exchange rate to the 151/152 range.

However, by the end of the year, I do expect the dollar to weaken, bringing the USD/JPY rate back down to around 140.

The Bank of Japan still leans toward raising interest rates, but the market expectations based on LSEG data suggest it’s unlikely to happen before late October.

European Open

European stocks were quiet on Monday morning as investors looked at mixed corporate earnings and waited for a possible trade deal between the US and the EU.

The STOXX 600 index, which tracks European shares, was almost flat, down just 0.01% at 546.97 points..

US Commerce Secretary Howard Lutnick said on Sunday he’s confident a trade deal with the EU can be reached, but warned that August 1 is the final deadline before tariffs are applied. He also mentioned there’s still "plenty of room" for an agreement after talks with European negotiators.

In sectors, European basic resources rose 2.6%, making it the best performer, while the automobile sector dropped 0.3%.

For individual stocks, Ryanair jumped 5.8% after reporting that its net profit more than doubled in the April-June quarter, making it one of the top gainers in the STOXX 600. On the other hand, Stellantis fell 2.4% after announcing it expects a net loss of 2.3 billion euros ($2.68 billion) for the first half of 2025.

On the FX front, the Japanese yen (JPY) strengthened by 0.7% to 147.74 per dollar but stayed near last week’s 3.5-month low of 149.19 as investors worried about Japan’s political and financial situation. It was last trading at 148.09 yen per dollar. The yen also rose slightly against the euro to 172.40 and against the British pound to 199.03.

The euro increased by 0.1% to 1.1642, while the British pound was at $1.3442. The US dollar index, which tracks the dollar against six other currencies, dropped 0.1% to 98.29.

The New Zealand dollar fell 0.1% to 0.5957 after inflation rose in the second quarter but was lower than expected. This led to speculation that interest rates might be cut next month due to weak economic conditions.

In cryptocurrencies, bitcoin rose 1% to 119412, staying below last week’s record high of 123153.

Currency Power Balance

Source: OANDA Labs

Gold prices have risen as pressure for further upside. Gold is trading up around $20 from the Asian session lows of $3346/oz.

For a full technical breakdown on Gold, read Asia midday: Singapore stocks hit record high, Gold (Chart of the day) bullish momentum building up

Oil prices stayed mostly steady on Monday, as investors expected the latest European sanctions to have little effect on Russian oil supplies.

Brent crude fell by 12 cents (0.2%) to $69.16 a barrel, after dropping 0.35% on Friday. US West Texas Intermediate (WTI) crude remained unchanged at $67.34, following a 0.3% drop in the previous session.

On Friday, the European Union approved its 18th round of sanctions against Russia over the war in Ukraine. These sanctions also targeted India's Nayara Energy, which exports oil products made from Russian crude.

Economic Data Releases and Final Thoughts

Looking at the economic calendar, it is a quiet day in terms of data releases.

However, earnings season is now in full swing, with Verizon Communications reporting from the US today before the Mag 7 later this week.

On the European front we have Ryanair that have already reported and a few other companies on the docket today.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the Day - FTSE 100 Index

From a technical standpoint, the FTSE 100 index is hovering at the psychological 9000 handle.

There is a possibility of a pullback though just looking at price action and the wicks off the last two days on the daily timeframe.

However, positive earnings developments and trade deal news could propel the FTSE beyond the 9000 handle. The question is whether the index will be able to hold onto any gains above the 9000 handle.

Looking at the RSI and it remains below overbought territory which does bode well for further upside moves.

FTSE 100 Daily Chart, July 21. 2025

Source: TradingView.com (click to enlarge)

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