By Mike Dolan
LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Japan’s yen strengthened on Monday as embattled Prime Minister Shigeru Ishiba vowed to stay on as leader even after his ruling coalition lost its majority in Sunday’s upper house elections.
I’ll dive into this and the rest of today’s market news below. Make sure to check out today’s column, where I discuss why a sudden shift in the euro and the threat of U.S. tariffs may give the European Central Bank a reason to pause rate cuts, even as deeper tensions may be quietly building.
Today’s Market Minute
* Japan’s ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba’s grip on power even as he vowed to remain party leader, citing a looming tariff deadline with the United States.
* The fringe far-right Sanseito party emerged as one of the biggest winners in Japan’s upper house election on Sunday, gaining support with warnings of a “silent invasion” of immigrants, and pledges for tax cuts and welfare spending.
* BP named Albert Manifold, the former boss of building materials producer CRH, as its new chairman on Monday, as it looks to address investor concerns about its strategy and weak share performance.
* The high-stakes clash between Exxon Mobil and Chevron over a prized South American oilfield may be a sign of what’s to come in the oil and gas industry as competition for a shrinking pool of prime assets heats up, writes ROI energy columnist Ron Bousso.
* Asia’s run of subdued imports of liquefied natural gas is set to extend for another month in July, with the top-importing region on track for a tiny increase from June. Read the latest from ROI columnist Clyde Russell.
Yen bounces as Japan PM hangs on
With markets rushing to price ‘worst case’ scenarios earlier this month, including the chance of a leadership hiatus just as next week’s August 1 tariff deadline hits, the outcome was seen as something of a relief. Even though pressure remains on Ishiba, his pledge to remain as PM offers at least some focus for any last minute trade negotiations.
Japanese markets were closed for a holiday and global currency markets offered the only clear sign of a reaction. The yen, which had hit a three-month low of 149.18 per dollar last week, firmed to just under 147.7 after the results. That dragged the dollar down across the board.
The other big movers first thing have been in global bond markets, where U.S. Treasury yields and European equivalents – perhaps in some read-across to Japanese investor flows – fell notably.
Treasury yields fell across the curve to 10-day lows – after rallying last week on a combination of benign producer price and inflation expectations readings as well as comments from Federal Reserve board dove Christopher Waller that he’s still in favor of resuming interest rate cuts as soon as this month.
Waller said on Friday he would accept the job as head of the U.S. central bank if asked by President Donald Trump, but so far Trump had not contacted him about it.
With the Fed outlook now confused by persistent White House pressure on Chair Jerome Powell and the outside chance that Trump attempts to fire him before his term expires next year, last week’s incoming price data has offered some comfort.
Fed futures reflect a near 70% chance of another Fed cut by September.
But the Wall Street Journal reported on Monday that Treasury Secretary Scott Bessent had counseled Trump not to fire Powell, given the financial disruption that might cause.
Trump, who sued the WSJ and its owners including Rupert Murdoch for at least $10 billion on Friday over the newspaper’s report on a 2003 birthday greeting from Trump to sex offender Jeffrey Epstein, denied the latest WSJ report on Bessent too.
Stock markets were steady to higher across the world, with Wall Street stock futures up ahead Monday’s bell.
Helping the mood, U.S. Commerce Secretary Howard Lutnick said on Sunday he was confident that Washington can secure a trade deal with the European Union, but August 1 is a hard deadline for tariffs to kick in. Lutnick said he had just gotten off the phone with European trade negotiators and there was “plenty of room” for agreement.
Meantime, China’s foreign ministry said European Commission President Ursula von der Leyen and European Council President Antonio Costa will meet with Chinese President Xi Jinping on Thursday.
The corporate earnings season unfolds during the week, meantime, with Tesla and Alphabet – two underperforming megacaps this year – reporting on Wednesday.
In Europe, Ryanair surged more than 6% as Europe’s largest low-cost carrier’s net profit more than doubled in its April-June quarter.
Chart of the day
China’s exports of rare earth magnets to the United States in June soared to more than seven times their May level, marking a sharp recovery in the flow of critical minerals used in electric vehicles, wind turbines and missiles after a Sino-U.S. trade deal. China, which provides more than 90% of the global supply of rare earth magnets, decided in early April to add several rare earth items to its export restriction list in retaliation for U.S. tariffs – creating major supply chain problems for many firms and industries.
But the two countries hammered out an agreement last month to resolve the issue – one in which Washington allowed chipmaker Nvidia to resume sales of its H20 AI chips to China. Separately, China has quietly issued its first 2025 rare earth mining and smelting quotas without the typical public statement – another sign of Beijing tightening its control over the crucial sector.
Today’s events to watch
* U.S. June leading indicator (8:30 AM EDT); Canada June producer price report
* U.S. corporate earnings: Verizon, Domino’s Pizza, Steel Dynamics, WR Berkley, NXP, Roper, Alexandria Real Estate
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(by Mike Dolan; editing by Christina Fincher)
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