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Tuesday, July 07, 2026
What’s happening: Japan’s stocks traded lower this morning as investors responded to the latest economic reports.
What happened: The broader selloff in tech stocks continued to exert pressure on Japan’s stock indices.
Semiconductor chip makers led the decline, triggered by a sharp downturn in Samsung Electronics’ shares.
Why it matters: Data released this morning showed that Japan’s foreign reserves declined by $18.40 billion to $1.287 trillion at the end of June, compared to $1.306 trillion in the previous month.
Household spending in Japan declined 0.4% year-over-year in May, after a 0.5% contraction in the previous month. However, the figure came in better than market estimates of a 2.5% decline. While the latest reading marked the sixth consecutive month of contraction, it was the softest in the sequence, signalling some resilience in consumer spending despite inflationary concerns.
Average cash earnings in Japan grew by 3.2% year-over-year in May, easing from a revised 3.6% gain in April. The figure missed market estimates of 3.4%. Still, it signalled the 53rd straight month of growth in nominal wages and remained above the 3% level for the fourth month. This marked the longest growth streak since 1992.
Financial stocks rose following the data release, with shares of Mitsubishi UFJ, Mizuho Financial and Sumitomo Mitsui recording gains.
Shares of Samsung Electronics fell almost 6% this morning despite the company reporting a 19-fold jump in quarterly profits amid strong demand for memory chips. Semiconductor-heavyweights, such as Kioxia Holdings, Tokyo Electron, Lasertec and Ibiden, were among the key losers.
Japan’s Nikkei 225 fell 0.96% to 69,068.33 this morning, while TOPIX edged lower to 4,101.76.
Meanwhile, the USD/JPY forex pair declined more than 0.1% to 161.87.
What to watch: Investors will continue monitoring developments in the US-Iran talks.
Data on Japan’s current account (0350 UAE Time), bank lending (0350 UAE Time) and Eco Watchers survey current (0900 UAE Time) will be released on Wednesday. Japan’s current account surplus, which widened to ¥3,907.8 billion in April from ¥2,370.0 billion in the year-ago period, is expected to rise further to ¥4121.3 billion in May. Analysts expect Japan’s bank lending to grow by 5.8% year-over-year in June following a 5.7% gain in May, while Japan’s services sector sentiment index is projected to surge to 44.6 in June from 43.6 in the previous month.
Context: The Canadian dollar slipped versus the US dollar this morning as investors assessed the recent economic data.
Details: Data released on Monday showed that Canada’s S&P Global services PMI declined to 47.1 in June from 50.6 in the previous month. This marked the steepest contraction in services activity since February.
The S&P Global Canada composite PMI also fell to 47.9 in June, recording the first contraction in six months, following a reading of 50.8 in May. The latest decline was driven by weakness in Canada’s services sector, while manufacturing output showed strong growth.
Meanwhile, the Bank of Canada is expected to keep interest rates on hold at its next policy decision on July 15.
Strength in the US dollar weighed on the Canadian currency this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged higher to 100.87.
Higher prices of crude oil, one of Canada’s major exports, lent some support to the loonie. Spot price for WTI crude oil gained 0.8% to $69.16 per barrel this morning.
The USD/CAD forex pair rose around 0.1% to 1.4213 this morning.
What to watch: Investors will continue monitoring the flow of crude oil through the Strait of Hormuz.
Data on Canada’s balance of trade (1630 UAE Time) and Ivey PMI (1800 UAE Time) will be released today. Analysts expect Canada’s trade surplus to narrow to C$2.0 billion in May, from April’s C$2.7 billion. Canada’s Ivey PMI, which rose to 58.2 in May from 57.7 in the previous month, is expected to gain further to 58.7 in June.
Other Markets: US trading indices closed higher on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.29%, 0.72% and 1.26%, respectively.
Ukraine said its drones hit Russia’s Omsk oil refinery, the largest refinery in the country. The news sent the USD/RUB pair higher in forex trading this morning.
The Philippines’ annual inflation rate slowed to 6.4% in June from 6.8% in the previous month. However, annual core inflation rose to 4.4%, from May’s reading of 4.1%, and came in higher than market estimates, which lent support to the USD/PHP forex pair.
Mexico’s gross fixed investment surged 5.9% year-over-year in April, following a 2.6% decline in March. This being the first annual gain in investment in 18 months sent the USD/MXN pair slightly lower in forex trading this morning.
UK’s new car sales jumped 11.4% year-over-year to 213,166 units in June. This is the strongest performance for the month since 2019 lent support to the GBP/USD forex pair.
Colombia’s producer price index climbed by 3.3% year-over-year in June, easing from a 6.8% surge in the previous month. However, the USD/COP pair rose in forex trading this morning.
Singapore’s foreign exchange reserves (1300 UAE Time), US LMI logistics managers index (1400 UAE Time), ADP employment change weekly (1615 UAE Time), balance of trade (1630 UAE Time), Redbook index (1655 UAE Time), RCM/TIPP economic optimism index (1800 UAE Time) and consumer inflation expectations (1900 UAE Time), Mexico’s auto exports (1600 UAE Time) and auto production (1600 UAE Time), Russia’s foreign exchange reserves (1700 UAE Time), Brazil’s car production (1800 UAE Time) and new car registrations (1800 UAE Time) as well as Turkey’s Treasury cash balance (1830 UAE Time).
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