Markets watch: Asian stocks slip; oil steady ahead of OPEC+ meet

Asian equities edged lower on Wednesday while the dollar hovered near multi-year lows, as investor focus turned to the likelihood of US interest rate cuts and President Donald Trump’s looming July 9 deadline for new trade tariffs. Meanwhile, oil prices held steady ahead of a key OPEC+ meeting this week.According to news agency Reuters, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.23 per cent in early trading, retreating from recent highs. Japan’s Nikkei 225 dropped 0.78 per cent, weighed down by tech stocks, while tech-heavy markets in South Korea and Taiwan also saw declines following a sell-off in US tech firms.Trump on Tuesday ruled out extending the July 9 deadline for countries to reach trade deals with the US, casting doubts on talks with Japan but expressing hope for an agreement with India. This stance, combined with his push to pass a $3.3 trillion tax-and-spending bill, has unsettled investors already wary of rising fiscal pressures."The near-term impact is mostly in the price, but the uncertainty factor could keep term premia elevated," said Aninda Mitra of BNY Investment Institute as quoted by Reuters, warning that the bill “hard wires” a steady fiscal deterioration.The dollar continued its slide, with the dollar index hovering near a low last seen in March 2022. The euro was last at $1.1793, close to a 3.5-year high, while the yen held steady around 143.52 per dollar. “Any disappointing economic data can prompt further dovish repricing of FOMC rate cuts and another round of USD selling,” said Carol Kong, strategist at Commonwealth Bank of Australia.Federal Reserve Chair Jerome Powell reiterated the Fed’s wait-and-see stance on rate cuts, despite political pressure from Trump. Market expectations currently price in 64 basis points of cuts for the rest of 2025, with a 21 per cent probability of a July move.According to Bloomberg, a regional stocks gauge slipped 0.2 per cent, with Japanese equities falling 1 per cent following Trump’s threat to impose higher tariffs on Tokyo and criticism of its resistance to US rice exports. While global equities sit near record levels, analysts caution that international markets may be overreacting to Trump’s trade threats. “There’s also an element of political theater here,” said Phillip Wool of Rayliant Global Advisors, as cited by Bloomberg.Meanwhile, oil markets remained in a narrow range. As per Reuters, Brent crude was up just 1 cent at $67.12 a barrel, while US WTI futures slipped 5 cents to $65.40. Traders are cautious ahead of the July 6 OPEC+ meeting, where the group is expected to agree to another production hike, possibly 411,000 barrels per day in August.Phil Flynn of Price Futures Group was quoted by Reuters as saying that “Oil prices seem to be in a tight range as we’ve seen a reduction in geopolitical risk and nerves about what OPEC may do in regards to raising production.”Geopolitical risk has eased somewhat following the end of a 12-day conflict between Iran and Israel. However, any developments from the OPEC+ meeting or from US economic data could shift prices. US crude inventories rose by 680,000 barrels last week, according to API figures, with official EIA data expected later Wednesday.With the US June payroll report due Thursday and trade tensions escalating, investors remain cautious about global growth prospects.Lower interest rates could boost economic activity and, in turn, support oil demand, said IG analyst Tony Sycamore.