Markets are also hanging on details of an anti-fragmentation tool intended to ease pressure on borrowing costs for the Union's most indebted members.

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Investors found some relief in Friday's rally on Wall Street and MSCI's broadest index of Asia-Pacific shares outside Japan added 0.4 percent, having shed 3.5 percent last week.

Japan's Nikkei was closed for a holiday, but futures traded at 27,000 compared to a cash close of 26,788, while South Korea gained 1.1 percent. S&P 500 futures edged up 0.2 percent in early trade, while Nasdaq futures firmed 0.4 percent.

A who's who of corporates report earnings will be on show this week including Goldman Sachs Group Inc, Bank of America Corp, International Business Corp, Netflix Inc, Tesla Inc and Twitter Inc.

Of the 35 companies in the S&P 500 having reported, 80 percent have beaten Street expectations, according to Refinitiv. Analysts now expect aggregate year-on-year second-quarter profit growth of 5.6 percent, down from 6.8 percent at the beginning of the quarter.

Also read: Wall Street and Asian stocks fall, dollar steadfast as growth outlook darkens

Need for Gas in EU

Investors have also been encouraged that the Federal Reserve is likely to hike by "only" 75 basis points next week, in part thanks to an easing in consumer fears of inflation.

"This softening of inflation expectations is one reason why we expect the FOMC will not accelerate the near-term hiking pace and will deliver a 75bp hike at the July FOMC meeting," said analysts at Goldman Sachs in a note.

It is a lighter week for US data, though the first round of flash surveys on global manufacturing will provide a timely reading on how industries are faring this month.

The Bank of Japan holds its policy meeting amid concerns the breakneck drop in the yen is adding to the cost of imported commodities and widening the country's trade deficit.

Yet markets assume the central bank will stick with it ultra-easy policies, making it the only one of the majors not to be raising rates.

The dollar was a shade softer at 138.30 yen, having climbed 1.8 percent last week to a 24-year peak of 139.38.

Against a basket of currencies, it was holding at 107.91, off last week's top of 109.29. The euro was a little steadier at $1.008, after bouncing from a two-decade trough of $0.99 last week.

"The Russia-Europe natural gas pipeline that is currently closed for maintenance is scheduled to be turned back on Thursday," noted CBA economist Joseph Capurso. "However, if the gas flow does not resume EUR and USD could drop by at least 2 percent."

Rising interest rates and a firm dollar have been a major drag for non-yielding gold which was stuck at $1,708 an ounce after shedding 2 percent last week.

Oil prices drifted lower as President Joe Biden continued his trip to the Middle East hoping to get agreement on an increase in output.

Saudi Arabia's foreign minister said a US-Arab summit on Saturday did not discuss oil and that OPEC+ would continue to assess market conditions and do what is necessary.

Brent dipped 82 cents to $100.34, while US crude eased 86 cents to $96.73 per barrel.

Also read: Raised Ukraine's stance on Russia gas turbine, says Volodymyr Zelenskyy

(Edited by : Sangam Singh)

First Published:Jul 18, 2022 6:52 AM IST