Global Shares Trade Mixed as Markets Await U.S. Data Ahead of Fed Decision

TOKYO — Global shares traded mixed Tuesday as investors turned their attention to U.S. economic data set for release later in the week that could influence whether the Federal Reserve trims interest rates at its next meeting.

European and U.S. futures showed only modest movement while Asian markets diverged amid political uncertainty in Japan. France’s CAC 40 rose 0.1% to 7,742.97, Britain’s FTSE 100 gained 0.1% to 9,232.78 and Germany’s DAX fell about 0.5% to 23,697.43. On Wall Street, Dow futures were little changed at 45,593.00 while S&P 500 futures rose 0.1% to 6,511.75.

In Asia, Japan’s benchmark Nikkei 225 erased earlier gains and finished 0.4% lower at 43,459.29 after briefly surpassing the 44,000 mark. Political uncertainty intensified after Prime Minister Shigeru Ishiba said over the weekend he planned to step down, leaving the ruling Liberal Democratic Party to choose a successor — a process that could take weeks and requires coalition partners to remain in power. Anticipation around potential successor Sanae Takaichi, considered hawkish on defense, buoyed defense-related stocks in Tokyo: Mitsubishi Heavy Industries rose 0.3%, IHI added 1.0% and Kawasaki Heavy climbed 0.4%. Veteran LDP lawmaker Toshimitsu Motegi has indicated he wants to run; other expected contenders include Farm Minister Shinjiro Koizumi and Chief Cabinet Secretary Yoshimasa Hayashi.

Elsewhere in the region, South Korea’s Kospi climbed 1.3% to 3,260.05, Hong Kong’s Hang Seng surged 1.2% to 25,938.13 and the Shanghai Composite fell 0.5% to 3,807.29. Australia’s S&P/ASX 200 declined 0.6% to 8,793.60.

Market sentiment has been shaped by growing expectations that the Federal Reserve will begin cutting its main interest rate later this year. “Asian markets opened Tuesday with momentum, riding Wall Street’s conviction that Fed cuts are no longer a question of if but how many. Nearly three reductions are now being priced before year-end. That expectation is washing through global markets like a spring tide,” said Stephen Innes, managing partner at SPI Asset Management.

Traders are watching a slate of U.S. reports that could alter that outlook. The U.S. government will release preliminary revisions to job growth figures through March on Tuesday, with inflation reports due on Wednesday and Thursday. Recent data pointing to a cooling labor market have already contributed to the shift in expectations; the Fed’s decision at its upcoming meeting, two Wednesdays from now, will hinge on the incoming information.

Commodities and currencies likewise reflected cautious positioning. Benchmark U.S. crude rose 85 cents to $63.11 a barrel, and Brent crude added 87 cents to $66.89 a barrel. The U.S. dollar slipped to 146.68 Japanese yen from 147.51 yen, while the euro eased to $1.1757 from $1.1765. Gold continued to gain as a perceived safe haven amid the shifting rate outlook and a softer dollar, surpassing the $3,600-per-ounce mark.

Analysts said the immediate market moves may be modest ahead of the key U.S. releases, but the data later in the week could quickly recalibrate expectations for the path of monetary policy. The Fed has in recent months expressed concern that trade tensions could add to inflationary pressures, but signs of a cooling labor market could increase the case among policymakers for moving to lower rates if inflation readings do not materially accelerate.

Investors and policymakers will be parsing the incoming U.S. reports closely for signs of whether slowing hiring and stable or falling inflation will leave the central bank room to ease policy. For now, markets are trading cautiously, with regional political developments and commodity prices adding to the mix of factors shaping trading decisions.