Most Asian stocks climbed on Monday, buoyed by a new high set on Wall Street, as traders monitored various nations’ attempts to finalize trade agreements with the U.S. ahead of an important deadline later in the week.
As the dollar lost strength due to increasing predictions of further interest rate reductions, all attention was on Donald Trump's tax-cutting legislation — which is moving closer to a Senate vote. However, various analysts caution that this measure might contribute trillions of dollars to the national debt.
The S&P 500 and Nasdaq closed at record highs on Friday, driven by hopes that governments might successfully prevent the steep tariffs threatened by the U.S. president in April from being implemented when they were delayed until July 9 to facilitate further discussions.
Authorities from Japan and India have prolonged their visits in Washington to keep discussions going, fostering optimism about potential accords with two of the globe's largest economic powers.
The possibility of extending the deadline received renewed optimism on Friday when Treasury Secretary Scott Bessent informed Fox Business that multiple countries are offering attractive deals. However, he noted that these agreements may not all conclude by the following week.
However, he stated: "If we manage to secure agreements with around 10 or 12 out of the crucial 18 — keeping in mind there are also about 20 additional significant partnerships — I believe we would be able to finalize the trade deals by Labor Day," set for September 1st.
Trump said at the weekend that he did not expect to extend the deadline, telling the "Sunday Morning Futures with Maria Bartiromo" show: "I don't think I'll need to".
"I could, no problem," he mentioned during the interview recorded on Friday.
In the meantime, Canada’s Finance Minister, François-Phillipe Champagne, announced on Sunday that Ottawa plans to remove taxes imposed on American technology companies. This move aims to facilitate a potential trade deal with Washington following President Trump’s decision to halt negotiations in response to the tax imposition.
Ottawa also stated that negotiations would continue with the intention of reaching an agreement by July 21.
Following Wall Street's historic performance, much of Asia saw similar gains.
Tokyo continued its recent upward trend driven by technology companies, with additional boosts seen in Shanghai, Sydney, Seoul, Singapore, Manila, and Jakarta.
However, Hong Kong, Wellington, and Taipei were conquered.
There wasn't much significant response to the data indicating that the decline in Chinese manufacturing slowed down even more in June following a ceasefire in trade tensions between China and the U.S.
The US dollar continued to lose ground relative to other currencies as investors boosted their expectations for at least two interest-rate reductions this year, prompted by President Trump’s suggestion that he might select a new head of the Federal Reserve to replace Chair Jerome Powell within the coming months.
"Markets are now anticipating more than two Federal Reserve interest rate cuts this year, extending well into 2026 as part of an extensive easing cycle," stated Stephen Innes from SPI Asset Management.
Although Powell might retain his position as chairman, market participants believe that the upcoming Federal Reserve chief will act, speak, and implement policies more aligned with those of a dovish leader, even wearing MAGA red.
The senators were also discussing Trump's "One Big Beautiful Bill," which would extend his expiring first-term tax cuts, amounting to a price tag of $4.5 trillion, along with enhanced border security measures.
The GOP president has increased the urgency to have the bill on his desk before July 4, and criticized Republicans in Congress who are not fully supportive.
Nevertheless, concerns persist regarding its effect on the economy, as the nonpartisan Congressional Budget Office estimates that the proposal could increase U.S. deficits by approximately $3.3 trillion over ten years.
Major points at approximately 02:30 GMT
Tokyo - Nikkei 225: Increased by 1.6% to reach 40,809.82
Hong Kong - Hang Seng Index: Down 0.4% at 24,183.73
Shanghai - Aggregate: Increased by 0.3% to reach 3,433.80
Euro/dollar: Increased to $1.1724 from $1.1718 on Friday
Pound/dollar: Increased to $1.3723 from $1.3715
Dollar/Yen: FALLING to 144.31 yen from 144.68 yen
Euro/pound: Increased to 85.45 pence from 85.43 pence
West Texas Intermediate: Down 0.5% at $65.18 per barrel
Brent North Sea Crude: Down 0.3% at $67.57 per barrel
New York - Dow: Increased by 1.0 percent to close at 43,819.27.
London - FTSE 100: Increased by 0.7 percent to close at 8,798.91.