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

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Nikkei makes new high, EU and Wall St futures edge up

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Oil market wary as Zelenskiy goes to Washington

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Dollar on defensive ahead of Fed conference

(Updates prices to Asia afternoon)

By Wayne Cole

SYDNEY, Aug 18 (Reuters) - Share markets pushed ahead in

Asia on Monday ahead of what is likely to be an eventful week

for U.S. interest rate policy, while oil prices were subdued as

risks to Russian supplies seemed to fade a little.

A cautiously risk-on mood saw indices in Japan and Taiwan

make record peaks, while Chinese blue chips reached their

highest in 10 months.

U.S. President Donald Trump now seemed more aligned with

Moscow on seeking a peace deal with Ukraine instead of a

ceasefire first, after meeting Russian President Vladimir Putin

in Alaska on Friday.

Trump will meet Ukrainian President Volodymyr Zelenskiy and

European leaders later on Monday to discuss the next steps,

though actual proposals are vague as yet.

The major economic event of the week will be the Kansas City

Federal Reserve's August 21-23 Jackson Hole symposium, where

Chair Jerome Powell is due to speak on the economic outlook and

the central bank's policy framework.

"Chair Powell will likely signal that risks to the

employment and inflation mandates are coming into balance,

setting up the Fed to resume returning policy rate to neutral,"

said Andrew Hollenhorst, chief economist at Citi Research.

"But Powell will stop short of explicitly signalling a

September rate cut, awaiting the August jobs and inflation

reports," he added. "This would be fairly neutral for markets

already fully pricing a September cut."

Markets imply around an 85% chance of a quarter-point rate

cut at the Fed's meeting on September 17, and are priced for a

further easing by December.

The prospect of lower borrowing costs globally has

underpinned stock markets and Japan's Nikkei climbed

0.9% to a fresh record high.

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

added 0.5%, having hit a four-year top last

week. Chinese blue chips jumped 1.3%, bringing gains

so far this quarter to over 8%.

EUROSTOXX 50 futures and DAX futures firmed

0.2%, while FTSE futures gained 0.3%.

SOLID EARNINGS

S&P 500 futures nudged up 0.1% while Nasdaq futures

added 0.2%, with both near all-time highs.

Valuations have been underpinned by a solid earnings season

as S&P 500 EPS grew 11% on the year and 58% of companies raised

their full-year guidance.

"Earnings results have continued to be exceptional for the

mega-cap tech companies," noted analysts at Goldman Sachs.

"While Nvidia has yet to report, the Magnificent 7 apparently

grew EPS by 26% year/year in 2Q, a 12% beat relative to

consensus expectation coming into earnings season."

This week's results will provide some colour on the health

of consumer spending with Home Depot, Target, Lowe's and Walmart

all reporting.

In bond markets, the chance of Fed easing is keeping down

short-term Treasury yields while the longer end is pressured by

the risk of stagflation and giant budget deficits, leading to

the steepest yield curve since 2021.

European bonds also have been pressured by the prospect of

increased borrowing to fund defence spending, pushing German

long-term yields to 14-year highs.

Wagers on more Fed easing have weighed on the dollar, which

dropped 0.4% against a basket of currencies last week to last

stand at 97.851.

The dollar was a fraction firmer on the yen at 147.41

, while the euro held at $1.1704 after adding

0.5% last week.

The dollar has fared better against its New Zealand

counterpart as the country's central bank is widely

expected to cut rates to 3.0% on Wednesday.

In commodity markets, gold bounced 0.5% to $3,343 an ounce

after losing 1.9% last week.

Oil prices struggled as Trump backed away from threats to

place more restrictions on Russian oil exports.

Brent dropped 0.1% to $65.78 a barrel, while U.S.

crude steadied at $62.73 per barrel.