Global rally takes a breather: Yen strengthens as Asian markets pull back ahead of central bank decisions

After weeks of record highs, global stocks pause for breath. Investors brace for major tech earnings and key monetary policy announcements. In Japan, the yen rebounds, ending a long streak of declines.

After a record-breaking run, global stock markets are losing momentum. Asian shares slipped about 0.5%, marking the first setback after days of gains. Futures point to a softer open in Europe, while in Tokyo, indexes retreated as the yen strengthened against the dollar, snapping a seven-day losing streak.

Investors are now turning their attention to a pivotal week, with earnings from tech giants such as Amazon and Microsoft and fresh guidance from major central banks — the Federal Reserve in particular. Investors were hoping for a trade agreement supported by concrete figures, but she warned that risks tied to tariffs and geopolitics were likely to remain high despite recent optimism.

So far, U.S. companies have weathered trade tensions surprisingly well, protecting profit margins through price increases and cost-cutting measures. Yet the bullish sentiment of recent months is set to be tested: markets are looking for clues on the Fed’s next rate-cut path, while Big Tech results will show whether earnings growth can keep pace.

Meanwhile, the yen emerged as the best performer among G10 currencies. The rebound followed talks between U.S. Treasury Secretary Scott Bessent and Japan’s new Finance Minister Satsuki Katayama, who discussed the recent volatility in exchange rates.

Japan’s currency also found support after Growth Strategy Minister Minoru Kiuchi said authorities would continue to monitor the economic impact of yen weakness.

With trade tensions easing and a busy week of economic events ahead, markets are entering a high-stakes phase: the global rally isn’t over — but for now, it’s catching its breath.

Andrea Pelucchi