Asian shares were mixed on Tuesday after Wall Street rose and yields surged in the U.S. Treasury market as election-related issues rattled markets around the world.
U.S. crude futures fell and oil prices rose. The Japanese yen was trading at 161.67 to the dollar early Tuesday, near its lowest level in 38 years.
The Nikkei Stock Average on the Tokyo market rose 1.1% to 40,74.69 as the weak yen led to buying of export-related stocks.
Australia’s S&P/ASX 200 fell 0.4% to 7,718.20. South Korea’s KOSPI fell 0.8% to 2,781.92, even as data from Statistics Korea showed the country’s consumer price inflation slowed to an 11-month low in June.
Hong Kong markets rose after the holiday break on Monday, with the Hang Seng Index up 0.3% to 17,775.84 and the Shanghai Composite Index rising 0.1% to 2,995.78.
Meanwhile, Taiwan’s Taiex rose 0.6%, while Bangkok’s SET fell 0.4%.
On Monday, the S&P 500 rose 0.3%, to 5,475.09, the Dow Jones Industrial Average rose 0.1%, to 39,169.52 and the Nasdaq Composite rose 0.8%, to 17,879.30.
The strongest performance in the world came across the Atlantic, where the CAC 40 index in Paris rose 2.8% before settling down to a 1.1% gain. The French election results suggested that the far-right parties may not win an overwhelming majority in the country’s parliamentary elections, raising hopes that the French government could enter into a deadlock, which would avoid the worst-case scenario of a far-right majority pushing through policies that would significantly increase the French government’s debt.
It’s a crucial election year around the world, with voters heading to polling stations in the UK later this week and soon elsewhere. In the US, pollsters are gauging the impact of last week’s debate between President Joe Biden and former President Donald Trump.
Investors are also focusing on the impact of the Supreme Court’s ruling on Monday that former presidents have broad immunity from prosecution, raising the possibility that criminal proceedings against President Donald Trump could be delayed until after the November election.
Trump Media & Technology Group, whose shares have risen and fallen on the back of Trump’s possible White House entrance, rose 1% to $33.08. But shares of the company that runs Trump’s Truth social platform are still well below their all-time high of about $70 earlier this year.
Treasury yields surged, just as they did on Friday immediately after the Biden-Trump debate, as the growing likelihood of a Republican victory in November sent traders circling back to the moves they made in 2016, according to strategists at Morgan Stanley. In addition to rising interest rates, traders also bet on shares of energy and financial companies.
The yield on the 10-year Treasury note rose to 4.46% from Friday’s close of 4.39% and Thursday’s close of 4.29%, a reversal of the general trend since the spring, when the 10-year Treasury yield rose above 4.70% in late April.
Yields had been generally lower on expectations that inflation was slowing and that the Federal Reserve would cut its key interest rate later this year from its highest level in more than two decades. High interest rates have been a drag on the U.S. economy by making borrowing more expensive for everything from homes to cars.
A report on Monday showed that U.S. manufacturing weakened more than economists expected last month, keeping hopes of a rate cut in check. Perhaps more importantly for Wall Street, a report from the Institute for Supply Management said price growth is slowing. Taken together, the data could provide more evidence that the Federal Reserve wants to see inflationary pressures abate before cutting rates.
The highlight of the week’s economic story is likely to come on Friday, when the US government reports how many workers it hired in June. Economists expect the overall payroll to fall to 190,000 from 272,000 in May, putting it closer to what Bank of America calls the “Goldilocks” number of about 150,000 with a drop to around 25,000.
At that level, the U.S. economy would continue to grow and avoid a recession without being strong enough to put undue upward pressure on inflation.
In other trading, benchmark U.S. crude rose 15 cents to $83.53 a barrel in electronic trading on the New York Mercantile Exchange, while the international standard Brent crude added 23 cents to $86.83 a barrel.
The euro fell to $1.0729 from $1.0738.
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