With Earnings in Focus, Trump Administration's Tariff Threats Lack Punch

Wall Street indexes attempted to rebound from Monday's sell-off, and investors shifted their focus to the start of the earnings season. 

The S&P 500 index increased 0.1%, and the tech-heavy Nasdaq Composite inched higher 0.2% amid growing consensus that the Trump administration's threats are not likely to derail international trade. 

Over the last six weeks, investors have realized that the Trump administration's threats are rarely followed through, and negotiators in China, Japan, Mexico, Canada, and the European Union have an upper hand. 

In the latest iteration of Trump's threat, 14 countries are targeted with rates between 25% and 40% starting from August 1.

The Trump administration's bungling of tariff revision has hit small and independent businesses that rely on intermediary or consumer goods made in Asia and Europe.

Donald Trump's erratic trade policy, lack of clarity on the level of tariffs paid at the U.S. ports of arrival, and on-again-off-again ban on artificial intelligence-linked tech products and software have forced U.S. businesses to halt international commerce. 

U.S. Stock Movers 

Solar energy stocks turned lower after the U.S. president issued an executive order to roll back green energy subsidies. 

Sunrun Inc. dropped 10.7% to $9.92, Enphase Energy Inc. decreased 5.4% to $40.15, and First Solar Inc. fell 4.6% to $168.42. 

With Earnings in Focus, Trump Administration's Tariff Threats Lack Punch

Wall Street indexes attempted to rebound from Monday's sell-off, and investors shifted their focus to the start of the earnings season. 

The S&P 500 index increased 0.1%, and the tech-heavy Nasdaq Composite inched higher 0.2% amid growing consensus that the Trump administration's threats are not likely to derail international trade. 

Over the last six weeks, investors have realized that the Trump administration's threats are rarely followed through, and negotiators in China, Japan, Mexico, Canada, and the European Union have an upper hand. 

In the latest iteration of Trump's threat, 14 countries are targeted with rates between 25% and 40% starting from August 1.

The Trump administration's bungling of tariff revision has hit small and independent businesses that rely on intermediary or consumer goods made in Asia and Europe.

Donald Trump's erratic trade policy, lack of clarity on the level of tariffs paid at the U.S. ports of arrival, and on-again-off-again ban on artificial intelligence-linked tech products and software have forced U.S. businesses to halt international commerce. 

U.S. Stock Movers 

Solar energy stocks turned lower after the U.S. president issued an executive order to roll back green energy subsidies. 

Sunrun Inc. dropped 10.7% to $9.92, Enphase Energy Inc. decreased 5.4% to $40.15, and First Solar Inc. fell 4.6% to $168.42. 

European Markets Ignore Latest Trump Threats, German Trade Surplus Shrank

European market indexes lacked direction but retained an upward bias, as investors reviewed the latest change in the U.S. trade policy. 

Benchmark indexes in Frankfurt, Paris, Milan, and London struggled to stay above the flatline. 

The Trump administration delayed the aggressive tariff deadline to August 1 from the July 9 deadline and warned Japan and South Korea to face 25% tariffs if negotiations are not wrapped up by the end of the month. 

The European Union is looking to strike a trade framework with the U.S. that would avoid steep tariffs on vehicles, pharmaceuticals, and steel and aluminum products. 

However, agriculture and food and beverage product shipments from the European Union may avoid excessive tariffs of 25%.

The constantly changing trade policy of the Trump administration has put businesses on alert, and the European Union has ramped up its trade negotiations with China, India, and Brazil.

German Trade Surplus Shrank In May 

Germany's May exports increased 0.4% to €129.4 billion, imports advanced 4.2% to €111.1 billion, and the trade surplus shrank to €18.4 billion from €22.3 billion a year ago, respectively. 

Exports to the U.S. decreased 7.7% to €12.1 billion, to China declined 2.9% to €6.8 billion, and to the U.K. rose 15.1% to €3.1 billion, according to the latest data available from the Federal Statistical Office, or Destatis. 

Europe Stock Movers 

Vehicle makers extended their losses of the previous month, and defense stocks turned volatile in Tuesday's trading. 

Volkswagen Group AG decreased 0.9% to €90.0, Mercedes-Benz Group AG declined 0.4% to €49.72, Renault SA fell 1.4% to €39.86, and Stellantis NV edged up 0.4% to €8.42. 

Rheinmetall AG increased 1.1% to €1,823.0, MTU Aero Engines AG added 1% to €1,823.0, Safran SA inched higher 0.4% to €275.70, and Rolls-Royce Holdings PLC eased 0.8% to 962.0.

European Markets Ignore Latest Trump Threats, German Trade Surplus Shrank

European market indexes lacked direction but retained an upward bias, as investors reviewed the latest change in the U.S. trade policy. 

Benchmark indexes in Frankfurt, Paris, Milan, and London struggled to stay above the flatline. 

The Trump administration delayed the aggressive tariff deadline to August 1 from the July 9 deadline and warned Japan and South Korea to face 25% tariffs if negotiations are not wrapped up by the end of the month. 

The European Union is looking to strike a trade framework with the U.S. that would avoid steep tariffs on vehicles, pharmaceuticals, and steel and aluminum products. 

However, agriculture and food and beverage product shipments from the European Union may avoid excessive tariffs of 25%.

The constantly changing trade policy of the Trump administration has put businesses on alert, and the European Union has ramped up its trade negotiations with China, India, and Brazil.

German Trade Surplus Shrank In May 

Germany's May exports increased 0.4% to €129.4 billion, imports advanced 4.2% to €111.1 billion, and the trade surplus shrank to €18.4 billion from €22.3 billion a year ago, respectively. 

Exports to the U.S. decreased 7.7% to €12.1 billion, to China declined 2.9% to €6.8 billion, and to the U.K. rose 15.1% to €3.1 billion, according to the latest data available from the Federal Statistical Office, or Destatis. 

Europe Stock Movers 

Vehicle makers extended their losses of the previous month, and defense stocks turned volatile in Tuesday's trading. 

Volkswagen Group AG decreased 0.9% to €90.0, Mercedes-Benz Group AG declined 0.4% to €49.72, Renault SA fell 1.4% to €39.86, and Stellantis NV edged up 0.4% to €8.42. 

Rheinmetall AG increased 1.1% to €1,823.0, MTU Aero Engines AG added 1% to €1,823.0, Safran SA inched higher 0.4% to €275.70, and Rolls-Royce Holdings PLC eased 0.8% to 962.0.

Tokyo Stocks Edged Higher as Japan Holds Firm Against U.S. Tariff Pressure

Stocks in Japan advanced after the U.S. agreed to delay the previously announced high tariffs, easing market anxieties. 

The Nikkei 225 Stock Average gained 0.2%, and the broader Topix inched higher 0.1%, as investors welcomed the extension of the so-called reciprocal tariff deadline by three weeks to August 1.

In a separate announcement, Trump alerted Japan and South Korea to the possible 25% tariff, lower than the previously announced 35% rate, if trade negotiations fail by the end of July.

Japan is reluctant to agree to any level of tariff, and Japanese negotiators have held a firm stance against the tariff, despite the shrill rhetoric from the White House.

The constant shift in the U.S. trade policy and the lack of clarity and stability on tariffs have kept exporters on the defensive and searching for other markets in South America, India, and the ASEAN region. 

On the economic front, Japan's current account surplus surpassed market expectations in May, providing additional support to market sentiment. 

The current account surplus expanded to 3.44 trillion yen from 2.95 trillion yen, driven by the swinging of the service account to a surplus of 201.1 billion yen from a deficit of 51.6 billion a year ago, respectively. 

For the fiscal year 2024, the current account surplus widened to a record high of 30.4 trillion yen from 26.2 trillion yen a year ago, the Ministry of Finance reported Tuesday. 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average edged up 0.2% to 39,672.14, and the broader Topix inched higher 0.1% to 2,814.78. 

Electrical machinery and equipment makers and artificial intelligence-linked stocks led gainers in Tokyo trading. 

Fujikura Ltd. advanced 4.3% to 2,814.78, Furukawa Electric Co. Ltd. jumped 6.2% to ¥7,398.0, Advantest Corp. gained 2.4% to ¥10,945.0, and Tokyo Electron Ltd. edged up 1% to ¥27,395.0. 

Marubeni Corp. inched higher 0.6% to ¥2,976.50, Itochu Corp. edged up 0.3% to ¥7,597.0, Mitsui & Company gained 0.5% to ¥3,011.0, and Sumitomo Corp. advanced 0.4% to ¥3,691.0. 

Tokyo Stocks Edged Higher as Japan Holds Firm Against U.S. Tariff Pressure,

Stocks in Japan advanced after the U.S. agreed to delay the previously announced high tariffs, easing market anxieties. 

The Nikkei 225 Stock Average gained 0.2%, and the broader Topix inched higher 0.1%, as investors welcomed the extension of the so-called reciprocal tariff deadline by three weeks to August 1.

In a separate announcement, Trump alerted Japan and South Korea to the possible 25% tariff, lower than the previously announced 35% rate, if trade negotiations fail by the end of July.

Japan is reluctant to agree to any level of tariff, and Japanese negotiators have held a firm stance against the tariff, despite the shrill rhetoric from the White House.

The constant shift in the U.S. trade policy and the lack of clarity and stability on tariffs have kept exporters on the defensive and searching for other markets in South America, India, and the ASEAN region. 

On the economic front, Japan's current account surplus surpassed market expectations in May, providing additional support to market sentiment. 

The current account surplus expanded to 3.44 trillion yen from 2.95 trillion yen, driven by the swinging of the service account to a surplus of 201.1 billion yen from a deficit of 51.6 billion a year ago, respectively. 

For the fiscal year 2024, the current account surplus widened to a record high of 30.4 trillion yen from 26.2 trillion yen a year ago, the Ministry of Finance reported Tuesday. 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average edged up 0.2% to 39,672.14, and the broader Topix inched higher 0.1% to 2,814.78. 

Electrical machinery and equipment makers and artificial intelligence-linked stocks led gainers in Tokyo trading. 

Fujikura Ltd. advanced 4.3% to 2,814.78, Furukawa Electric Co. Ltd. jumped 6.2% to ¥7,398.0, Advantest Corp. gained 2.4% to ¥10,945.0, and Tokyo Electron Ltd. edged up 1% to ¥27,395.0. 

Marubeni Corp. inched higher 0.6% to ¥2,976.50, Itochu Corp. edged up 0.3% to ¥7,597.0, Mitsui & Company gained 0.5% to ¥3,011.0, and Sumitomo Corp. advanced 0.4% to ¥3,691.0. 

China Markets Approached 3-Month Highs Amid Protracted Tariff Uncertainty

Stock market indexes in China and Hong Kong rebounded ahead of the release of key inflation reports on Wednesday.

The Hang Seng Index edged up 0.8%, and the mainland-focused CSI 300 index advanced nearly 1% as investors reviewed the latest iteration of change in the U.S. trade policy. 

The Trump administration delayed the start of additional tariffs on 14 trading partners but threatened to impose a 25% import tax on Japan and South Korea in the event of a lack of an agreement. 

Investors bid up stocks, hoping that Donald Trump will back down at the last minute and agree on a lower rate of tariff, as in the past.

The Hang Seng index traded near a three-month high and recouped all the losses after the Trump administration launched a global tariff war to finance tax cuts for the wealthy. 

The constant shift in the U.S. trade policy and ongoing uncertainty have wreaked havoc on small and medium-sized manufacturing companies in China and Asia, pushing thousands of U.S. independent retailers and businesses to the brink of collapse. 

At least three million jobs are impacted in China, Vietnam, and Japan, and as many as 95,000 U.S. small businesses are likely to face closure this year. 

Moreover, U.S. consumers are facing higher prices as most businesses pass the cost of tariffs to consumers.

The average U.S. tariff on imported goods across all industries is likely to jump from less than 5% to close to 20%, which could raise as much as $150 billion for the U.S. federal government, too little to make a dent in the annual fiscal deficit. 

China's overall consumer price inflation is expected to inch higher by 0.1%, and the producer price is likely to extend its decline for the 33rd month in a row and fall more than 3%. 

The National Bureau of Statistics is scheduled to release two inflation reports on Wednesday.

China Indexes and Stocks 

The Hang Seng index increased 0.8% to 24,098.71, and the mainland-focused CSI 300 index advanced 0.9% to 3,994.36. 

Baidu Inc. jumped 3.3% to HK $88.50, Xiaomi Corp. gained 2.1% to HK $58.55, and Kuaishou Technology jumped 3.4% to HK $65.20. 

Alibaba Group Holding advanced 1% to HK $106.50, Tencent Holdings Ltd. decreased 0.2% to HK $501.0, and Meituan edged up 0.2% to HK $119.60. 

China Markets Approached 3-Month Highs Amid Protracted Tariff Uncertainty

Stock market indexes in China and Hong Kong rebounded ahead of the release of key inflation reports on Wednesday.

The Hang Seng Index edged up 0.8%, and the mainland-focused CSI 300 index advanced nearly 1% as investors reviewed the latest iteration of change in the U.S. trade policy. 

The Trump administration delayed the start of additional tariffs on 14 trading partners but threatened to impose a 25% import tax on Japan and South Korea in the event of a lack of an agreement. 

Investors bid up stocks, hoping that Donald Trump will back down at the last minute and agree on a lower rate of tariff, as in the past.

The Hang Seng index traded near a three-month high and recouped all the losses after the Trump administration launched a global tariff war to finance tax cuts for the wealthy. 

The constant shift in the U.S. trade policy and ongoing uncertainty have wreaked havoc on small and medium-sized manufacturing companies in China and Asia, pushing thousands of U.S. independent retailers and businesses to the brink of collapse. 

At least three million jobs are impacted in China, Vietnam, and Japan, and as many as 95,000 U.S. small businesses are likely to face closure this year. 

Moreover, U.S. consumers are facing higher prices as most businesses pass the cost of tariffs to consumers.

The average U.S. tariff on imported goods across all industries is likely to jump from less than 5% to close to 20%, which could raise as much as $150 billion for the U.S. federal government, too little to make a dent in the annual fiscal deficit. 

China's overall consumer price inflation is expected to inch higher by 0.1%, and the producer price is likely to extend its decline for the 33rd month in a row and fall more than 3%. 

The National Bureau of Statistics is scheduled to release two inflation reports on Wednesday.

China Indexes and Stocks 

The Hang Seng index increased 0.8% to 24,098.71, and the mainland-focused CSI 300 index advanced 0.9% to 3,994.36. 

Baidu Inc. jumped 3.3% to HK $88.50, Xiaomi Corp. gained 2.1% to HK $58.55, and Kuaishou Technology jumped 3.4% to HK $65.20. 

Alibaba Group Holding advanced 1% to HK $106.50, Tencent Holdings Ltd. decreased 0.2% to HK $501.0, and Meituan edged up 0.2% to HK $119.60. 

Trump Administration Postpones Severe Tariffs Deadline Again, Wall Street Stocks Turned Lower

Stock market indexes wavered around the flatline as investors reviewed yet another change in tariff policy. 

The S&P 500 index decreased 0.2%, and the tech-heavy Nasdaq Composite eased 0.5% after the Trump administration struggled to sign key deals before the self-imposed deadline on July 9. 

The U.S. president postponed the deadline to August 1, as key trading partners resisted the administration's plans for severe import duties. 

The Trump administration led investors to believe that key trading partners—China, Mexico, Canada, the European Union, and Japan—are eager to accept aggressive tariffs to gain access to the largest market in the world.

However, the administration's strong-arm tactics have so far yielded few results and caused severe business disruptions that are likely to drive at least 100,000 small firms out of business.

Last week, Wall Street indexes extended two months of gains to new record highs, but markets in Europe and Asia struggled after a week of choppy trading.

Optimism prevailed amid expectations that stability will return to international trade, and key U.S. trade partners will finalize agreements ending months of uncertainties and chaos unleashed by the Trump administration.

In the week ahead, investors in the U.S. are looking forward to the release of the consumer inflation expectation survey, monthly wholesale inventories, and jobless claims data.

The Fed’s minutes and balance sheet announcement and the monthly budget statement are also on schedule.

On the earnings front, markets expect results from Costco, Delta Air Lines, Levi Strauss, PriceSmart, WD-40, First Bancshares, AEHR Test Systems, Conagra Brands, and Progressive Corp.

U.S. Movers 

Tesla Inc. dropped 7.8% to $290.84, and the company's chief executive said he plans to start a new political party, which will further divide his attention from the business.

Trump Administration Postpones Severe Tariffs Deadline Again, Wall Street Stocks Turned

Stock market indexes wavered around the flatline as investors reviewed yet another change in tariff policy. 

The S&P 500 index decreased 0.2%, and the tech-heavy Nasdaq Composite eased 0.5% after the Trump administration struggled to sign key deals before the self-imposed deadline on July 9. 

The U.S. president postponed the deadline to August 1, as key trading partners resisted the administration's plans for severe import duties. 

The Trump administration led investors to believe that key trading partners—China, Mexico, Canada, the European Union, and Japan—are eager to accept aggressive tariffs to gain access to the largest market in the world.

However, the administration's strong-arm tactics have so far yielded few results and caused severe business disruptions that are likely to drive at least 100,000 small firms out of business.

Last week, Wall Street indexes extended two months of gains to new record highs, but markets in Europe and Asia struggled after a week of choppy trading.

Optimism prevailed amid expectations that stability will return to international trade, and key U.S. trade partners will finalize agreements ending months of uncertainties and chaos unleashed by the Trump administration.

In the week ahead, investors in the U.S. are looking forward to the release of the consumer inflation expectation survey, monthly wholesale inventories, and jobless claims data.

The Fed’s minutes and balance sheet announcement and the monthly budget statement are also on schedule.

On the earnings front, markets expect results from Costco, Delta Air Lines, Levi Strauss, PriceSmart, WD-40, First Bancshares, AEHR Test Systems, Conagra Brands, and Progressive Corp.

U.S. Movers 

Tesla Inc. dropped 7.8% to $290.84, and the company's chief executive said he plans to start a new political party, which will further divide his attention from the business.

Germany's Industrial Output Rebounded In May, UK's Home Price Index Increase Moderated In June

European markets lacked direction on Monday as investors reassessed the bilateral trade negotiations between the European Union and the U.S. 

Benchmark indexes in Frankfurt, Paris, Milan, and London wavered around the flatline after the Trump administration pushed back the upcoming deadline to August 1 from July 9. 

The European Union is likely to strike a limited trade framework deal with the U.S. and delay detailed discussions at the industry level as far back as possible. 

Trade negotiators in Brussels are hoping to avert high tariffs on automobiles, food products, and pharmaceuticals while keeping the high barriers intact for U.S. food and agriculture products. 

Germany's Industrial Production Rebounded In May

On the economic front, Germany's industrial production advanced 1% in May from a year ago, reversing a decrease of 2.1% in April, the Federal Statistics Office reported Monday.

The manufacturing sector rebound was driven by a higher demand in pharmaceutical and automotive sectors, but the 3.9% contraction in the construction sector and the 1.8% decline in energy-intensive industry kept the gain in check.

Sweden's CPI Accelerated in June

Sweden's annual consumer price inflation accelerated to 0.8% in June from 0.2% in May, according to Statistics Sweden. 

The overall inflation jumped to a four-month high but well below the 2% target rate set by the Riksbank. 

UK Home Price Index Rises at Modest Pace

The UK's home price index rose at the slowest pace in eleven months, but home prices are expected to continue to rise at the modest pace in the second half.

The Halifax House Price Index in the UK increased 2.5% from a year ago in June, slower than the upwardly revised 2.5% in May. 

Home prices stalled in June, and the average home price was £296,665 compared to £296,782 in May.

"With markets pricing in two more rate cuts from the Bank of England by year-end, and the average rate on newly drawn mortgages now at its lowest since 2023, we continue to expect modest house price growth in the second half of the year”, said Amanda Bryden, Head of Mortgages, Halifax. 

Europe Movers

Allianz SE increased 0.9% to €344.60, Münchener Re Group added 0.7% to €561.80, and Commerzbank added 0.5% to €28.22. 

Rheinmetall AG added 0.3% to €1,759.50, MTU Aero Engines gained 1% to €374.80, Airbus SE increased 0.7% to €176.64, and Rolls-Royce Holdings plc advanced 0.9% to 971.20 pence. 

LVMH decreased 0.5% to €475.30, Kering SA dropped 0.7% to €196.72, Hermes International SCA gained 0.4% to €2,355.0, and Brunello Cucinelli SpA edged down 0.4% to €107.30. 

Germany's Industrial Output Rebounded In May, UK's Home Price Index Increase Moderated In June

European markets lacked direction on Monday as investors reassessed the bilateral trade negotiations between the European Union and the U.S. 

Benchmark indexes in Frankfurt, Paris, Milan, and London wavered around the flatline after the Trump administration pushed back the upcoming deadline to August 1 from July 9. 

The European Union is likely to strike a limited trade framework deal with the U.S. and delay detailed discussions at the industry level as far back as possible. 

Trade negotiators in Brussels are hoping to avert high tariffs on automobiles, food products, and pharmaceuticals while keeping the high barriers intact for U.S. food and agriculture products. 

Germany's Industrial Production Rebounded In May

On the economic front, Germany's industrial production advanced 1% in May from a year ago, reversing a decrease of 2.1% in April, the Federal Statistics Office reported Monday.

The manufacturing sector rebound was driven by a higher demand in pharmaceutical and automotive sectors, but the 3.9% contraction in the construction sector and the 1.8% decline in energy-intensive industry kept the gain in check.

Sweden's CPI Accelerated in June

Sweden's annual consumer price inflation accelerated to 0.8% in June from 0.2% in May, according to Statistics Sweden. 

The overall inflation jumped to a four-month high but well below the 2% target rate set by the Riksbank. 

UK Home Price Index Rises at Modest Pace

The UK's home price index rose at the slowest pace in eleven months, but home prices are expected to continue to rise at the modest pace in the second half.

The Halifax House Price Index in the UK increased 2.5% from a year ago in June, slower than the upwardly revised 2.5% in May. 

Home prices stalled in June, and the average home price was £296,665 compared to £296,782 in May.

"With markets pricing in two more rate cuts from the Bank of England by year-end, and the average rate on newly drawn mortgages now at its lowest since 2023, we continue to expect modest house price growth in the second half of the year”, said Amanda Bryden, Head of Mortgages, Halifax. 

Europe Movers

Allianz SE increased 0.9% to €344.60, Münchener Re Group added 0.7% to €561.80, and Commerzbank added 0.5% to €28.22. 

Rheinmetall AG added 0.3% to €1,759.50, MTU Aero Engines gained 1% to €374.80, Airbus SE increased 0.7% to €176.64, and Rolls-Royce Holdings plc advanced 0.9% to 971.20 pence. 

LVMH decreased 0.5% to €475.30, Kering SA dropped 0.7% to €196.72, Hermes International SCA gained 0.4% to €2,355.0, and Brunello Cucinelli SpA edged down 0.4% to €107.30. 

Japan's Nominal Wage Growth Decelerated In May, Nikkei 225 Eased Amid Trade Worries

Stocks in Japan faced headwinds ahead of the looming U.S. trade deadline and a weak rise in nominal wages. 

The Nikkei 225 Index fell 0.6%, and the broader Topix eased 0.7% after the U.S. ramped up pressure on Japan to accept aggressive tariffs on vehicles and parts. 

The unpredictable Trump administration set August 1 as the deadline for the start of an additional 25% tariff on Japanese automobile imports, but the level of the tariff could change in the weeks ahead.

In addition, Japan's Prime Minister Shigeru Ishiba reiterated that Japan is not likely to "easily compromise" with Washington's proposal of up to 35% tariffs on Japanese imports.

On the economic front, Japan's nominal wages rose at the slowest pace in three months, according to the Ministry of Health, Labour, and Welfare. 

Japan's nominal wages rose at an annual pace of 1% in May, marking the third consecutive month of deceleration and falling to the lowest level since March 2024. 

Real wages, adjusted for inflation, decreased 2.9%, extending the decline in purchasing power for the fifth month in a row and falling at the fastest pace in nearly two years.

Smaller companies are still struggling to pass higher wages, following the increase of more than 5% agreed upon between large companies and labor unions. 

The string of weak nominal wage increases stoked the fears that Japan's economy may face an uphill climb to register positive growth in the current fiscal year. 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.6% to 39,566.05, and the broader Topix fell 0.7% to 2,810.13. 

Mitsubishi UFJ Financial Holding declined 2.4% to ¥1,965.50, Sumitomo Mitsui Financial Holding decreased 2.1% to ¥3,614.0, and Mizuho Financial Group fell 2.4% to ¥3,948.0. 

Seven & I Holdings decreased 0.3% to ¥2,242.50, Fast Retailing Co. Ltd. declined 0.1% to ¥47,610.0, Takashimaya Co. Ltd. increased 0.4% to ¥1,098.50, and Aeon Co. Ltd. advanced 1.8% to ¥4,561.0.

Japan's Nominal Wage Growth Decelerated In May, Nikkei 225 Eased Amid Trade Worries

Stocks in Japan faced headwinds ahead of the looming U.S. trade deadline and a weak rise in nominal wages. 

The Nikkei 225 Index fell 0.6%, and the broader Topix eased 0.7% after the U.S. ramped up pressure on Japan to accept aggressive tariffs on vehicles and parts. 

The unpredictable Trump administration set August 1 as the deadline for the start of an additional 25% tariff on Japanese automobile imports, but the level of the tariff could change in the weeks ahead.

In addition, Japan's Prime Minister Shigeru Ishiba reiterated that Japan is not likely to "easily compromise" with Washington's proposal of up to 35% tariffs on Japanese imports.

On the economic front, Japan's nominal wages rose at the slowest pace in three months, according to the Ministry of Health, Labour, and Welfare. 

Japan's nominal wages rose at an annual pace of 1% in May, marking the third consecutive month of deceleration and falling to the lowest level since March 2024. 

Real wages, adjusted for inflation, decreased 2.9%, extending the decline in purchasing power for the fifth month in a row and falling at the fastest pace in nearly two years.

Smaller companies are still struggling to pass higher wages, following the increase of more than 5% agreed upon between large companies and labor unions. 

The string of weak nominal wage increases stoked the fears that Japan's economy may face an uphill climb to register positive growth in the current fiscal year. 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.6% to 39,566.05, and the broader Topix fell 0.7% to 2,810.13. 

Mitsubishi UFJ Financial Holding declined 2.4% to ¥1,965.50, Sumitomo Mitsui Financial Holding decreased 2.1% to ¥3,614.0, and Mizuho Financial Group fell 2.4% to ¥3,948.0. 

Seven & I Holdings decreased 0.3% to ¥2,242.50, Fast Retailing Co. Ltd. declined 0.1% to ¥47,610.0, Takashimaya Co. Ltd. increased 0.4% to ¥1,098.50, and Aeon Co. Ltd. advanced 1.8% to ¥4,561.0.

China Indexes Face Reality of High U.S. Tariffs

China stocks faced selling pressures amid trade uncertainty and lack of catalysts. 

The Hang Seng index decreased 0.5%, and the mainland-focused CSI 300 index fell 0.6% ahead of the looming self-imposed deadline by the U.S. for its global trade partners. 

Despite bold claims by the Trump administration, the U.S. is struggling to strike trade deals with China, the European Union, Canada, South Korea, and Mexico before the July 9 deadline.

Trade negotiations with China have stalled for three weeks as the U.S. looks for at least a 40% duty on direct imports from China and demands duty-free access for agriculture exports. 

The U.S. and China have agreed to an early August deadline, and both countries have taken tentative steps to cool down tensions.

China has lifted its restrictions on rare earth shipments, and the U.S. has eased its ban on the sale of design software for advanced chips.

Moreover, the latest trade framework between the U.S. and Vietnam called for 20% tariffs on goods shipments and a 40% rate on transshipment. 

The Trump administration has targeted shipments from China in its negotiations with Mexico, Cambodia, Thailand, and Malaysia, hoping to further fragment international supply chains away from the second-largest economy.

China Indexes and Stocks 

The Hang Seng index decreased 0.5% to 23,808.91, and the CSI 300 index fell 0.6% to 3,958.86. 

Alibaba Group Holding decreased 0.3% to HK $104.80, Tencent Holdings rose 0.3% to HK $500.50, and Meituan eased 0.4% to HK $117.90. 

Export-sensitive companies declined following the trade uncertainties and worries about the excess capacity in the solar industry. 

Xinyi Solar Holdings Ltd. edged down 4.2% to HK $2.76, JA Solar Technology dropped 1% to ¥10.33, and Trina Solar fell 1% to ¥14.64. LONGi Green Energy Technology decreased 0.7% to ¥15.46. 

FWD Group Holdings increased 1% to HK $38.40, and the insurance company completed its listing on the Hong Kong Stock Exchange. 

The company sold 9.13 million shares at a price of HK $38.0 per share in an initial public offering and raised HK $3.4 billion.