Nikkei Rises 1.4%, Led by Electronics, Metals Stocks — Market Talk

2012 ET - Japanese stocks are higher in early trade following a U.S. tech stock rally overnight. Electronics and metals stocks are leading the gains. Keyence is up 4.1% and Fujikura is 5.1% higher. The dollar is at 161.94 yen, compared with Y161.84 as of Monday's Tokyo stock market close. Investors are closely watching U.S.-Iran peace talks and any comments on the yen's recent decline by Japanese government officials. The Nikkei Stock Average is up 1.4% at 70448.33. (kosaku.narioka@wsj.com; @kosakunarioka)

2012 ET - JGB futures edge lower in the early Tokyo session, weighed by the yen's depreciation which tends to boost import prices and inflationary pressures in Japan. This, in turn, could lead to further BOJ rate increases. Meanwhile, investors may also focus on Japanese Finance Ministry's auction today of about 2.8 trillion yen of two-year sovereign notes. "We expect the 2y auction to clear smoothly," SMBC Nikko Securities' Lisa Mochizuki says in a research report. "2y yields look fair," the junior analyst adds. Benchmark 10-year JGB futures are 0.08 yen lower at 127.96 yen. (ronnie.harui@wsj.com)

1945 ET - Japanese stocks may rise following a rally in U.S. tech shares overnight. Nikkei futures are up 1.2% at 70520 on the SGX. The dollar is at 161.92 yen, compared with Y161.84 as of Monday's Tokyo stock market close. Investors are focusing on U.S.-Iran peace talks and any comments on the yen's recent depreciation by Japanese government officials. The Nikkei Stock Average rose 0.2% to 69468.11 on Monday. (kosaku.narioka@wsj.com)

1637 ET - The U.S. Supreme Court ruling that President Trump can't fire Fed officials is a double-edged sword for Chairman Warsh, JPMorgan's Michael Feroli writes. He says the decision "is mostly a win" for him, "for the simple reason that now Trump can't fire Warsh." It also means that Warsh will need to convince, rather than coerce, his colleagues to back his agenda for the central bank. The court decision keeps Governor Cook on the job. Feroli adds that the ruling stops short of equating central bank independence with monetary policy independence, a question that could be revisited by future courts, he says. (paulo.trevisani@wsj.com; @ptrevisani)

1631 ET - Bitcoin is trading above $60k today, but some analysts are bracing for another possible downturn that could take bitcoin as low as into the $40k range - which if accurate would be the lowest bitcoin has traded at since early 2024, when bitcoin was on its way up to a then-record high of around $72,000, according to data from Coinglass. In a note, analysts with Bitfinex say that $53,400 is now the "key support level" to watch - and if that's breached, then bitcoin could briefly dive into $40k territory. That's because, in part, ETF money continues to flee bitcoin, says Bitfinex. "This move reflects a structural exodus in the spot markets," says the firm. Bitcoin is currently up 1.2% to $60,288, according to data from LSEG. (kirk.maltais@wsj.com)

1552 ET - Treasury yields edge higher amid expectations of an extended period of high interest rates. Yieldsare on track for a quarterly increase, as concerns about war-driven energy inflation move markets. Such fears ease as U.S. and Iran reportedly keep alive talks to restore shipping through Hormuz, while uncertainty lingers on. Crude rises but remains near pre-war levels. The JOLTS report is due tomorrow, along with the Case-Shiller house price index, the Chicago business survey and the Conference Board consumer confidence gauge. The 10-year yield adds 0.003 percentage point to 4.375%. The two-year rises 0.021 p.p. to 4.108%. (paulo.trevisani@wsj.com; @ptrevisani)

1525 ET - Canada's economy might not be as resilient as aggregate data suggest, says Stefane Marion, chief economist at National Bank of Canada. He cites monthly figures on firm creation and closings, and says the numbers for manufacturing demonstrate acute stress for trade-exposed Canadian companies. Marion says the number of active manufacturing firms fell in 1Q to its lowest level in at least a decade, excluding the Covid-19 pandemic. Meanwhile, firm counts across all other industries remain much closer to cycle highs. "Canada may still be generating growth elsewhere in the economy, but its trade-exposed production base is telling a more fragile story," Marion warns. (paul.vieira@wsj.com, @paulvieira)

1344 ET - Major cryptocurrencies are edging higher as bitcoin pushes back above the $60k mark. Focus among crypto investors is squarely on next steps for Michael Saylor's bitcoin-accumulation methods--with the bitcoin downturn enough to put Strategy Inc.'s bitcoin treasury underwater by roughly $10B to $15B. Today, Strategy announced that it might sell bitcoin to raise up to $1.25B in cash to help bolster its ability to pay dividends on its preferred-stock STRC. With that and $2.55B in cash, Saylor says Strategy can cover its STRC dividends for nearly 26 months. Strategy currently holds 847,363 BTC, worth over $50B. (kirk.maltais@wsj.com)

1222 ET - Uncertainty about the future of the U.S.-Mexico-Canada trade pact will continue to cast a pall over the Canadian economy and lead to slower-than-anticipated growth in 2026, Capital Economics says. Trade uncertainty and lower immigration intake is expected to slow growth this year to 0.5%, CapEcon says. The firm projectsgrowth to pick up steam over the next year although cautioning USMCA uncertainty remains a major wildcard. U.S. withdrawal from USMCA looks unlikely given advanced talks with Mexico. "But there is still a risk that talks drag on" for longer than a year, the firm says. That could further delay a rebound in business investment, and a boost to exports following some tariff relief, CapEcon says. (paul.vieira@wsj.com; @paulvieira)

1212 ET - The U.S. Supreme Court's ruling blocking President Trump from firing Fed governor Cook "offers some comfort with respect to Fed independence," Ameriprise's Russell Price says. The court rules that the president can fire officials at independent agencies at will, except for central bankers. The decision "is a win for market sentiment," Price says. He warns, however, that the issue of Fed independence is "likely to remain a simmering background concern until proven otherwise." Treasury yields are little changed since the Supreme Court announcement, with the 10-year trading at 4.378%.(paulo.trevisani@wsj.com; @ptrevisani)

1204 ET - Long-term Treasury yields are likely to fall in the near future, while the front end of the curve remains elevated, Bank of America's Meghan Swiber and Eleanor Xiao write. They say investors who had bet on a back-end selloff, which would take long-term yields higher, are losing money. That makes them prone to unwind their short positions, which would increase demand for long-term bonds and weigh on yields. "Foreign demand stays soft, reinforcing a split demand backdrop," Swiber and Xiao say. They see "a tactical tension but not a strategic shift," and stay short two-year Treasurys. (paulo.trevisani@wsj.com; @ptrevisani)

1156 ET - While geopolitics remains important, the bigger market driver in the second half of the year might be monetary policy, Columbia Threadneedle Investments' Anthony Willis says in a note. In the U.S., the economy remains resilient and the Federal Reserve has adopted a more hawkish tone, the senior economist says. "As investors reassess whether the Fed may need to raise rates again--and how often--market pricing is likely to remain sensitive to incoming data and central bank communication," he says. (emese.bartha@wsj.com)