The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, May 20, 2025. REUTERS/staff/File Photo Purchase Licensing Rights , opens new tab

Summary

Companies Eurpoean stocks steady

Yen stronger after Japanese upper house elections

Wall St futures firm before tech earnings blitz

Euro underpinned as ECB seen on hold

SYDNEY/LONDON, July 21 (Reuters) – European shares held steady and the yen firmed on Monday, as markets shrugged off the Japanese ruling coalition’s defeat in upper house weekend elections and turned to focus on this week’s U.S. tech earnings and European Central Bank policy meeting.

Investors were also hoping for some progress in trade talks ahead of U.S. 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.

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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 will meet Xi on Thursday.

Market focus was on weekend news out of Japan, where 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 vowed to stay on, which along with a market holiday, limited the reaction . The yen was 0.5% firmer at 148.065 to the dollar and up 0.3% against the euro .

“The loss was within the range of expectations, and actually the outlook was even more pessimistic,” said Nissay Research Institute chief economist Tsuyoshi Ueno.

“In terms of negotiations with the U.S., it is easy to doubt whether a government with such a weak foundation is reliable as a negotiating partner,” he added. “For the Bank of Japan, if there is political instability, it will be difficult to raise interest rates, and pressure on the yen will continue.”

The BOJ still has a bias to raise rates further, but markets imply little chance of a move until late October.

While the Nikkei (.N225) , opens new tab was shut, futures traded at 39,885, up on the cash close of 39,819.

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S&P 500 futures edged 0.2% higher, while Nasdaq futures were up 0.3%. U.S. indexes are already around record highs in anticipation of more solid quarterly earnings reports.

“They are going to be key for sentiment because frankly there’s not a lot else to drive things,” said Michael Brown, senior research strategist at Pepperstone.

“We saw the banks deliver decent results last week, so you’d certainly be looking for the big tech names to keep up with that to reinforce the bull case (for equities),” he said.

In tech news, Microsoft (MSFT.O) , opens new tab issued an alert about “active attacks” on server software used by government agencies and businesses, urging customers to download security updates.

Elsewhere, euro zone government bond yields eased ahead of euro zone PMI data and the European Central Bank meeting later this week, at which it is expected to leave rates at 2% following a string of cuts.

“The press conference will likely keep highlighting uncertainty and need to wait for tariff negotiations to conclude before deciding the next step,” said analysts at TD Securities in a note. “Similarly, its ‘meeting-by-meeting’ language would be retained in the release.”

The euro dipped 0.5% last week, moving off a recent near-four-year top of $1.1830. The dollar index was a fraction lower at 98.306 .

U.S. Treasury yields fell, leaving the yield on the benchmark 10-year note down 4.5 basis points at 4.286%. Bonds got a boost late last week after Federal Reserve Governor Christopher Waller repeated his call for a rate cut this month.

Most of his colleagues, including Chair Jerome Powell, have argued a pause is warranted to judge the inflationary impact of tariffs and markets imply almost no chance of a move in July. A September cut is put at 61%, rising to 80% for October.

Powell’s reticence on rates has drawn the ire of Trump who threatened to fire the Fed chief, before backing down. The spectre of a potential political appointee who would seek to ease policy sharply has investors on edge.

In commodity markets, gold firmed 0.5% to $3,365 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 over its war in Ukraine could curb its exports.

Brent edged up 0.1% to $69.32 a barrel.

Editing by Shri Navaratnam, Amanda Cooper and Mark Potter

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