Markets look towards earnings and ECB decision

​​​Japan's political shift supports yen strength

​Japan's ruling coalition has lost its upper house majority, an outcome that was widely anticipated by market participants. The election results have not caused significant disruption to regional equity markets, partly because Tokyo's main exchanges remained closed for a public holiday.

​The political developments have provided some support for the Japanese yen, which strengthened 0.4% against the US dollar. This move reflects investor concerns about potential changes to Japan's monetary policy stance and trade negotiations under a weakened government coalition.

​The Japanese yen's resilience comes at a time when many had expected continued weakness against major currencies. Political uncertainty often creates safe-haven demand for the yen, despite Japan's ultra-loose monetary policy environment.

​Chinese markets edge higher despite global headwinds

​Chinese blue chip stocks managed to gain 0.3% during the session, with particular strength seen in rare earth and construction sectors. This modest advance came after the People's Bank of China kept interest rates unchanged, meeting market expectations.

​The performance of Chinese equities has been relatively subdued in recent weeks, as investors continue to assess the impact of ongoing trade tensions and domestic economic challenges. However, selective sector strength suggests some underlying resilience.

​Construction and infrastructure-related stocks have benefited from expectations of continued government support for domestic investment projects. Meanwhile, rare earth companies have gained on supply chain concerns and strategic resource considerations.

​Wall Street optimism ahead of tech earnings

​US equity futures showed modest gains, with both S&P 500 and Nasdaq 100 futures rising 0.2%. This advance comes ahead of a crucial week for technology earnings, with results expected from Alphabet, Tesla, and several major defence contractors.

​Market sentiment remains broadly positive, with indices trading near record highs despite recent volatility in certain sectors. The technology sector's performance will be particularly closely watched given its significant weighting in major indices.

​Defence stocks have been in focus recently, with geopolitical tensions supporting the sector's outlook. Meanwhile, Tesla's results will provide insight into electric vehicle demand trends and the company's expansion plans.

​European Central Bank to hold rates steady

​The euro remained relatively stable at $1.1630 as markets prepare for the European Central Bank's (ECB) latest monetary policy decision on Thursday. Most analysts expect the ECB to maintain its current interest rate stance while providing cautious guidance about future policy direction.

​The central bank faces a delicate balancing act between supporting economic growth and managing persistent inflationary pressures across the eurozone. Recent economic data has shown mixed signals about the region's recovery trajectory.

​Currency markets have been relatively quiet ahead of the announcement, with traders positioning for potential volatility following any surprises in the policy statement or press conference commentary.

​Commodities gain on supply concerns

Gold showed strength with prices climbing 0.5% to $3,367.00 per ounce. The precious metal has benefited from ongoing geopolitical tensions and uncertainty about central bank policies globally.

​Oil markets also found support despite expectations that OPEC+ may adjust output levels in the coming months. Supply chain disruptions and geopolitical risks continue to underpin crude prices.