Market Commentary: Monday 21st July

Asian markets opened the week on a steady note. With Japan’s onshore market closed for a holiday, Nikkei 225 futures held steady despite Prime Minister Ishiba’s ruling coalition losing its majority in the upper house. The JPY recouped some of its losses from the past two weeks and is currently trading at 147.86. Japan’s top trade negotiator, Ryosei Akazawa, is planning to visit Washington to continue tariff negotiations.

In China, the central bank maintained its benchmark lending rates as expected, following slightly better-than-forecast Q2 economic data. The one-year Loan Prime Rate (LPR) remains at 3.0%, and the five-year LPR—key to mortgage pricing—stays at 3.5%, signaling a steady policy stance amid moderate economic recovery.

Meanwhile, trade negotiations continue to be a focal point, with hopes for progress before the August 1 tariff deadline set by President Trump. U.S. Commerce Secretary Howard Lutnick expressed optimism about reaching a deal with the European Union, adding a layer of cautious hope to global trade sentiment.

Back in Europe, EU envoys are set to meet as early as this week to draft a retaliation plan if they cannot reach a deal with the U.S. The economic calendar is light on macro releases today. Investors are now turning their attention to the upcoming earnings season, with Wall Street futures showing caution ahead of reports from major tech firms.

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