Asia markets mixed as China holds key rates

July 21, 2025 (MLN): Asia-Pacific markets traded mixed Monday after the People’s Bank of China stood pat on its 1-year and 5-year loan prime rates.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.1%, while South Korean stocks added 0.5%.

Chinese blue chips firmed 0.3% as Beijing kept interest rates unchanged as widely expected, as CNBC reported.

Investors were also assessing the latest developments on the trade front, as they came into focus once again over the weekend when the White House reiterated its position on tariffs.

U.S. Commerce Secretary Howard Lutnick Sunday called Aug. 1 the “hard deadline” for countries to start paying tariffs, although he also added that “nothing stops countries from talking to us after August 1.”

Investors were also hoping for some progress in trade talks ahead of President Donald Trump's August 1 tariff deadline, with U.S. Commerce Secretary Howard Lutnick still confident a deal could be reached with the European Union.

There were reports Trump and Chinese leader Xi Jinping were closer to arranging a meeting, though likely not until October at the earliest.

European Commission President Ursula von der Leyen has stolen a march and will meet with Xi on Thursday.

In Japan, the ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba's grip on power as a tariff deadline looms.

Ishiba expressed his intention to stay in the position, which along with a market holiday, limited the reaction and the yen was 0.4% firmer at 148.29 to the dollar.

"Ishiba will try to govern with support from some within the opposition, but this likely means a looser fiscal policy and is not good news for bond yields," said Rodrigo Catril, a senior FX strategist at NAB.

"History also suggests that domestic political uncertainty tends to keep the BOJ on the sidelines, so the prospect of rate hikes is now set to be delayed for a little bit longer."

The Bank of Japan still has a bias to raise rates further but markets are pricing little chance of a move until the end of October.

While the Nikkei was shut, futures traded at 39,820 and in line with the cash close of 39,819.

EUROSTOXX 50 futures and DAX futures both dipped 0.3%, while FTSE futures lost 0.1%. S&P 500 futures and Nasdaq futures both edged up 0.1%, and are already around record highs in anticipation of more solid earnings reports.

A host of companies reporting this week include Alphabet and Tesla, along with IBM. Investors also expect upbeat news for defence groups RTX, Lockheed Martin and General Dynamics.

Ramped up government spending across the globe has seen the S&P 500 aerospace and defence sector rise 30% this year.

The euro was unchanged at $1.1622 in early trading, having dipped 0.5% last week and away from its recent near-four-year top of $1.1830.

The dollar index was a fraction firmer at 98.465.

In commodity markets, gold was little changed at $3,348 an ounce with all the recent action in platinum which last week hit its highest since August 2014.

Oil prices were caught between the prospect of increased supply from OPEC+ and the risk European Union sanctions against Russia for its war in Ukraine could curb its exports.

Brent edged up 0.1% to $69.36 a barrel, while U.S. crude added 0.2% to $67.45 per barrel.

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