Asian Markets Dip as Investors Assess US Rate Cut Prospects and Trade Uncertainties

Asian equities retreated as market participants recalibrated expectations for Federal Reserve easing. MSCI's Asia-Pacific ex-Japan index shed 0.23%, stepping back from last week's record high. Japan's Nikkei 225 fell 0.78% amid tech sector weakness, while Taiwan's Taiex and South Korea's Kospi dropped 0.31% and 0.87% respectively, tracking overnight declines in US tech shares.

Trade tensions remained a focal point as President TRUMP reaffirmed his hardline stance on deal deadlines. While expressing skepticism about reaching terms with Japan, he projected confidence in finalizing an agreement with India. The dollar maintained its downward trajectory as markets priced just 21% odds of a July rate cut, with 64 basis points of reductions anticipated for 2025.

All eyes now turn to Thursday's US payrolls report, which could provide critical insights into the Fed's policy path. Chair Jerome Powell emphasized a wait-and-see approach regarding tariff impacts on inflation, resisting political pressure for immediate rate cuts. The labor market continues to show resilience, with May job openings data exceeding expectations.