- Asia shares track Wall St, rise on possible shift in US trade policy
- Stock futures suggest weak opening for Europe
- Euro zone inflation data due later on Tuesday
SINGAPORE, Jan 7 (Reuters) - Asia's shares followed Wall Street's positive lead on Tuesday as some investors hoped U.S. President-elect Donald Trump would adopt less aggressive tariffs than previously thought when he takes office.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.03%, while Japan's Nikkei jumped 2%, boosted by a rally in technology stocks.
Stocks in Europe, however, looked set for a negative start after Monday's gain. EUROSTOXX 50 futures fell 0.5%, while FTSE futures retreated 0.47%.
In the U.S., S&P 500 futures slipped 0.07%. Nasdaq futures lost 0.16% after the underlying indexes rose on Monday to more than a one-week high.
The Washington Post reported on Monday that Trump aides were exploring tariff plans that would be applied to every country but only cover certain sectors deemed critical to national or economic security, in what would represent a marked softening from promises Trump had made during the 2024 presidential campaign.
While the news initially sent stocks rallying and the dollar falling, Trump's subsequent denial on his Truth Social platform reversed some of the U.S. currency's declines.
"No one really knows for sure what kind of tariffs or trade policies the Trump administration will implement," said Khoon Goh, head of Asia research at ANZ.
"It's still possible that what the Washington Post reported is true. His officials and aides of course will go through and come up with various options, but ultimately it's up to Trump to decide.
"For now, he is still talking tough on tariffs. But we know from experience from his first term that he is a person that is open to doing deals. I think that's partly why markets at this stage are not reacting too negatively."
The dollar hovered near a one-week low at 108.12 , nursing some losses from the previous session.
The euro and sterling extended gains from the previous session, each rising more than 0.1% to trade at $1.0402 and $1.25395, respectively.
In China, the CSI300 index and Shanghai Composite Index reversed early losses to gain 0.28% and 0.17%, respectively.
Hong Kong's Hang Seng Index slumped 1.89%.
China's main stock exchanges asked some large mutual funds to restrict stock selling at the start of the year, three sources familiar with the matter said, as authorities sought to calm markets heading into a tricky period for the world's second-largest economy.
DATA DUMP
Inflation figures from the euro zone later on Tuesday will refine the outlook for more rate cuts from the European Central Bank. Markets are pricing in nearly 100 basis points worth of easing in 2025 for now .
The week is filled with data releases particularly from the United States, which will be headlined by the December nonfarm payrolls report on Friday.
That will be previewed by data on ADP hiring, job openings and weekly jobless claims.
Anything upbeat would support the case for fewer rate cuts from the Federal Reserve. Markets have already scaled back expectations to just 40 basis points for 2025.
Minutes of the Fed's latest meeting due on Wednesday will offer colour on their dot-plot predictions, while there will be plenty of live comment with several top policymakers.
The prospect of a less aggressive Fed easing cycle this year has in turn kept U.S. Treasury yields supported, with the benchmark 10-year yield last at 4.6057%, after rising in the previous session to its highest since May.
The two-year yield steadied at 4.2599%.
Elsewhere, the dollar notched up a six-month high against the Japanese yen at 158.425.
The Canadian dollar strengthened to 1.4311 per U.S. dollar, extending a rally on Monday after Canadian Prime Minister Justin Trudeau said he would step down in the coming months.
"Should Canada move toward an early election in which a Conservative-led government emerges, the CAD could appreciate," said Thierry Wizman, global FX and rates strategist at Macquarie.
"This is based on the view that certain outcomes will likely improve for Canada under a Conservative-led government, and even in anticipation of a Conservative-led government."
In commodities, oil prices edged lower on Tuesday, with Brent falling 0.03% to $76.28 a barrel, while U.S. crude eased 0.11% to $73.48 per barrel.
Spot gold rose 0.38% to $2,645.41 an ounce.
Reporting by Rae Wee; Editing by Jacqueline Wong and Neil Fullick
Source: Reuters