Volkswacht Bodensee - Asian stocks rise on trade deal hopes, Tokyo hit by Trump warning

The dollar fell again as investors grow increasingly confident the Federal Reserve will cut rates at least twice this year, with keen interest in US jobs data due this week.

Investors are also keeping an eye on the progress of the US president's signature multi-trillion-dollar tax-cutting bill, which is being debated in the Senate.

While few trade agreements have been reached as the White House's July 9 deadline approaches, equity markets are enjoying a healthy run-up on expectations that breakthroughs will be made or the timeline will be pushed back.

Comments from Trump and some of his top officials suggesting there could be some wiggle room have added to the positive mood, with National Economic Council director Kevin Hassett telling CNBC a "double digit" number of pacts, including frameworks, were near.

News that Canada had rescinded a tax affecting US tech firms, which had prompted Trump to halt trade talks, and restarted negotiations fuelled optimism that other governments would make deals.

All three main indexes on Wall Street rose again Monday, with the S&P 500 and Nasdaq each pushing to another record high, providing a springboard for Asia.

Shanghai, Singapore, Seoul and Taipei led healthy gains across the region, while London, Paris and Frankfurt opened on the front foot.

However, Tokyo, which has enjoyed a strong run in recent weeks, sank more than one percent after Trump threatened to impose a fresh levy on Japan over a row about the country accepting US rice exports.

"I have great respect for Japan, they won't take our RICE, and yet they have a massive rice shortage," Trump wrote on his Truth Social platform.

"In other words, we'll just be sending them a letter, and we love having them as a Trading Partner for many years to come," he added.

Japan has seen rice prices double over the past year owing to supply issues caused by various factors, piling pressure on Prime Minister Shigeru Ishiba ahead of key elections this month.

Trump's outburst over the grain came after he had hit out at what he considered an unfair balance in the trade in cars between the two countries, and floated the idea of keeping 25 percent tariffs on autos in place.

"Trump has been shaking things up by expressing dissatisfaction with issues such as automobiles and rice, signaling a stall in trade negotiations with Japan," Hideyuki Ishiguro, at Nomura Asset Management, said.

"If the negotiations with Japan were to be unilaterally terminated or break down, it could undermine the assumptions behind investing in Japanese stocks."

The Nikkei was also hit by a stronger yen as expectations for a series of Fed rate cuts weigh on the dollar.

The greenback has been hammered by speculation Trump will install someone willing to reduce rates quickly when central bank boss Jerome Powell leaves his post next year.

The prospect of lower borrowing costs has pushed the Dollar Index, which compares the greenback to a basket of major currencies, to its lowest level since February 2022.

While most observers see the Fed moving in September or October, non-farm payrolls figures due Friday will be keenly watched, with a soft reading likely to boost the chances of an earlier cut.

Gold prices rose more than one percent to sit around $3,330 as the cheaper dollar and prospect of lower rates make the commodity more attractive to investors.

Senators continue to debate Trump's so-called "Big Beautiful Bill", with its passage on a knife's edge owing to wavering Republicans amid warnings it will add more than $3 trillion to deficits.

The president has called for lawmakers to get the mega-bill, which extends tax cuts and slashes spending on key entitlements, to his desk by July 4.

- Key figures at around 0715 GMT -

Tokyo - Nikkei 225: DOWN 1.2 percent at 39,986.33 (close)

Shanghai - Composite: UP 0.4 percent at 3,457.75 (close)

London - FTSE 100: DOWN 0.3 percent at 8,782.85

Hong Kong - Hang Seng Index: Closed for holiday

Euro/dollar: UP at $1.1788 from $1.1785 on Monday

Pound/dollar: UP at $1.3734 from $1.3732

Dollar/yen: DOWN at 143.70 yen from 143.98 yen

Euro/pound: DOWN at 85.70 pence from 85.82 pence

West Texas Intermediate: UP 0.2 percent at $65.25 per barrel

Brent North Sea Crude: UP 0.3 percent at $66.92 per barrel

New York - Dow: UP 0.6 percent at 44,094.77 (close)

S.Spengler--VB