Global Markets Pause Ahead of U.S. Data and Fed Signals

Asian shares eased on Thursday as investors locked in profits and positioned for month- and quarter-end portfolio rebalancing. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2% after surging 5.5% this month and 9% this quarter. Japan’s Nikkei rose 0.1%, extending a robust 13% quarterly gain. Hong Kong’s Hang Seng edged down 0.2%, while Chinese blue chips were little changed. Analysts noted that rebalancing flows could trigger selling in U.S. and Japanese indices, with Germany and Australia likely to benefit.

Wall Street closed lower for a second straight session as traders took profits after record highs. S&P 500 and Nasdaq futures inched up 0.1% ahead of remarks from Federal Reserve officials. San Francisco Fed President Mary Daly signaled further interest rate cuts would be needed, though the timing remains uncertain. Fed Chair Jerome Powell struck a cautious tone after last week’s first policy easing of the year. Futures markets still price in a 92% chance of an October cut, but expectations for total 2025 easing have trimmed to 100 bps from 125 bps.

Bond markets were volatile as investors digested heavy U.S. government and corporate supply. The 10-year Treasury yield held at 4.14%, steady after a three-basis-point rise. The Treasury is set to auction $44 billion in seven-year notes following earlier two- and five-year sales.

In currencies, the yen weakened to a one-year low of 174.78 against the euro and a record trough of 187.30 against the Swiss franc. The dollar eased slightly to 148.77 yen after sharp overnight gains. The Swiss National Bank is expected to pause its tightening cycle later today.

Commodities were mixed. U.S. crude slipped 0.4% to $64.73 a barrel and Brent dipped 0.3% to $69.11, though prices remain near seven-week highs. Analysts highlight ongoing supply concerns from Iraq, Venezuela, and Russia. Gold held steady at $3,739 an ounce, consolidating after a dollar-driven decline.

Investors now await key U.S. economic releases, including the Fed’s preferred inflation gauge, the PCE report, and the final Q2 GDP reading.