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Asian stock markets: https://tmsnrt.rs/2zpUAr4

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Wall St futures edge up, yields dip as Biden bows out

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Earnings season to test lofty tech valuations

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US inflation data seen reinforcing case for Sept rate cut

By Wayne Cole

SYDNEY, July 22 (Reuters) - Asian shares tread

cautiously on Monday ahead of a packed week of corporate

earnings that should test the sky-high valuations of tech

stocks, while investors hope a key reading in U.S. inflation

will narrow the odds on a September rate cut.

Investors seemed well-prepared for news U.S. President Joe

Biden had dropped out of the election race and endorsed Vice

President Kamala Harris for the Democratic ticket.

Online betting site PredictIT showed pricing for a victory

by Donald Trump had fallen 3 cents to 61 cents, while Harris

climbed 11 cents to 38 cents. California governor Gavin Newsom,

another possible Democratic challenger, trailed at 4 cents.

Markets took the news in their stride, with S&P 500 stock

futures edging up 0.3%, while Nasdaq futures added

0.5%. Futures for 10-year Treasuries rose 3 ticks, while

10-year bond yields dipped 2 basis points to 4.22%.

"As Trump's polling results have lifted, markets have

favoured positions that anticipate more trade barriers and

possibly higher inflation," ANZ analysts said.

"Some polls have Harris performing better than Biden against

Trump, and the Democrats will be hoping the next polls feature a

Harris-driven bump."

MSCI's broadest index of Asia-Pacific shares outside Japan

eased 0.2%, having shed 3% last week amid a

general risk-off mood. Japan's Nikkei lost 0.6%, and

South Korea's benchmark index was down 0.4%.

U.S. second-quarter earnings are poised to dominate the

week, with Tesla and Google-parent Alphabet

kicking off the season for the "Magnificent Seven" megacap group

of stocks.

Others reporting include General Electric ( GE ), General

Motors ( GM ), Ford and Lockheed Martin ( LMT ).

The tech sector is projected to increase year-over-year

earnings by 17%, while profit for the communication services

sector is seen rising about 22%.

Such gains would outpace the 11% estimated rise for the S&P

500 overall, according to LSEG IBES.

A busy week for economic news will culminate with the

Federal Reserve's favoured inflation measure out on Friday. The

core personal consumption expenditures index is seen rising 0.1%

in June, pulling the annual pace down a tick to 2.5%.

Markets are wagering heavily that a benign outcome will

underline the case for a September rate cut, which futures are

pricing as a 97% chance.

Also due are figures for advance gross domestic product that

are forecast to show growth picking up to an annualised 1.9% in

the second quarter, from 1.4% in the first.

The closely-watched Atlanta Fed GDPNow indicator points to

growth of 2.7%, suggesting some risk to the upside.

The Bank of Canada meets on Wednesday and is considered

almost certain to cut its rates by a quarter point to 4.5%.

China is expected to leave its one-year and five-year loan

prime rates unchanged later on Monday.

Beijing released a policy document on Sunday outlining known

ambitions, from developing advanced industries to improving the

business environment, but showed no sign of imminent structural

shifts in the world's second-biggest economy.

In currency markets, the dollar gave back a little of last

week's safe haven gains as the euro edged up 0.2% to $1.0900

. The dollar likewise dipped 0.2% on the Japanese yen

to 157.21.

In commodity markets, gold held at $2,410 an ounce

and not far from last week's record high of $2,483.60.

Oil prices inched higher, with little sign of progress on a

ceasefire deal in Gaza as Israeli forces battled Palestinian

fighters in the southern city of Rafah on Sunday.

Brent gained 39 cents to $83.02 a barrel, while U.S.

crude rose 42 cents to $80.55 per barrel.