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Japan, Australia outperform rest of Asia

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European stock futures up 0.5%, S&P 500 futures rise 0.3%

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Dollar drifts, oil rebounds after four sessions of decline

(Updates prices for Asia afternoon)

By Stella Qiu

SYDNEY, Aug 6 (Reuters) - Most share indexes edged up in

Asia on Wednesday as investors looked through weak U.S. data and

corporate warnings about the hit from tariffs, while the dollar

struggled to gain ground amid growing Federal Reserve rate cut

expectations.

European stocks are bracing for a higher open, with

EUROSTOXX 50 futures up 0.5%. Wegovy-maker Novo Nordisk

reported second-quarter sales growth of 18%, below

initial analyst expectations.

Wall Street futures recovered from an earlier dip, with

Nasdaq futures up 0.3% and S&P 500 futures rising

0.4%. Shares of AI chip stock Advanced Micro Devices ( AMD )

slid 6.6% after the bell on disappointing data centre revenue.

"We see risk assets in a tug-of-war between solid U.S.

corporate earnings, powered by the artificial intelligence (AI)

theme, and tariffs hurting growth while lifting inflation," said

analysts at BlackRock Investment Institute.

"We stay overweight U.S. stocks but get granular while

assessing the tariff fallout."

Overnight, U.S. stocks finished lower after the services

sector activity unexpectedly flatlined in July. Employment

further weakened and input costs climbed by the most in nearly

three years, underscoring the impact from President Donald

Trump's tariff policy.

While U.S. earnings have been generally upbeat in the second

quarter, they are starting to show the impact of tariffs.

Taco Bell parent Yum Brands ( YUM ) missed expectations as

steep trade duties dented consumer spending, while Caterpillar ( CAT )

warned that U.S. tariffs would cost it up to $1.5

billion this year.

In Asia, MSCI's broadest index of Asia-Pacific shares

outside Japan slipped 0.1%, while Japan's Nikkei

gained 0.6%. Australia's resource-heavy shares

rose 0.8%.

Both Chinese blue chips and Hong Kong's Hang Seng

index were up 0.1%.

Trump on Tuesday said it would announce tariffs on

semiconductors and chips in the next week or so, while the U.S.

would initially impose a "small tariff" on pharmaceutical

imports before increasing it substantially in a year or two.

He also said the U.S. was close to a trade deal with China

and that he would meet his Chinese counterpart Xi Jinping before

the end of the year if an agreement was struck. However, he

threatened to further raise tariffs on goods from India over its

Russian oil purchases.

The Reserve Bank of India kept its key interest rate steady

at 5.50% on Wednesday, in line with expectations, but the odds

of another cut have risen after the steep U.S. tariffs on Indian

exports last week.

In currency markets, the dollar consolidated after sliding

from two-month highs last Friday on a weak jobs report that had

markets price in a near-certain chance of a Fed interest rate

cut in September.

The dollar index, which measures the U.S. currency

against six counterparts, was flat at 98.73 and little changed

this week after Friday's 1.4% fall.

Fed funds futures imply a 94% chance of a rate cut next

month, with at least two cuts priced in for this year, according

to the CME's FedWatch.

Investors are waiting for Trump's pick to fill a coming

vacancy on the Fed Board of Governors. Trump said the decision

will be made soon, while ruling out Treasury Secretary Scott

Bessent as a contender to replace current chief Jerome Powell,

whose term ends in May 2026.

Treasury yields edged up after a $58 billion auction of

three-year notes went poorly, but still hovered near multi-month

lows. More supply will hit the market this week with $42 billion

in 10-year notes on Wednesday and $25 billion in 30-year bonds

on Thursday.

Two-year Treasury yields rose 2 basis points to

3.7323%, having risen 3.5 bps overnight, while benchmark 10-year

yields ticked up 3 bps to 4.2217%, after holding

steady overnight.

In commodity markets, oil prices rose after four straight

sessions of declines. U.S. crude rose 0.6% to $65.57 per

barrel, while Brent was at $68.07 per barrel, up 0.6%.

Trump said on Tuesday he will decide on whether to sanction

countries that purchase Russian oil after a meeting with Russian

officials scheduled for Wednesday.

Spot gold prices slipped 0.3% to $3,370 an ounce.