Asian shares fluctuated in a narrow range as traders considered the possibility of Donald Trump becoming president again following last week’s debate with Joe Biden.
Japanese shares were mixed, while Australian and South Korean shares were little changed. Hong Kong’s stock market is due to reopen after a holiday. The yield on the 10-year government bond was flat after rising 7 basis points overnight to approach 4.5%.
Australian government bonds fell ahead of the release of minutes from the central bank’s June policy meeting. The dollar rose against most of the major G10 currencies. U.S. stocks fell during Asian hours even as Wall Street edged up modestly on Monday after gains in big tech shares.
Bloomberg News reported that the Democratic National Committee is considering formally nominating Biden as early as mid-July to place him on the November ballot. Meanwhile, a divided Supreme Court has ruled that Trump has some immunity from criminal prosecution for trying to overturn the results of the 2020 election, all but ensuring that there will be no trial before the November election.
According to Ian Lingen and Bayle Hartman of BMO Capital Markets, investors are now looking to the US presidential election as an even bigger potential market event, as President Trump’s chances of retaking the White House now appear significantly increased.
“In last week’s presidential debate, neither candidate proposed any policies to reduce the nation’s unsustainably growing budget deficit,” said Jose Torres of Interactive Brokers. “Meanwhile, the U.S. political climate remains highly uncertain, with media figures and Democratic lawmakers calling on Biden to drop out of the presidential race following his poor performance in the debate.”
Demand for Chinese government bonds has surged amid pessimism about the domestic economy, and the central bank has said it will borrow bonds from primary dealers, a possible sign the central bank is considering selling them to quell soaring bond prices.
Meanwhile, the release of an index showing that business confidence at major domestic manufacturers has improved from three months ago has raised expectations that the Bank of Japan will raise interest rates later this month.
In Europe, European Central Bank President Christine Lagarde said there wasn’t enough evidence to show the threat of inflation had passed, raising hopes that regulators would pause on interest-rate cuts this month. The euro was little changed after the French election results suggested more extreme policies from the far right were unlikely.
Last week’s presidential debate changed Trump’s chances of beating Biden, leading Morgan Stanley strategists Matthew Hornback and Guneet Dhingra to reevaluate their assumptions heading into the election.
“A key issue is that markets are likely to price in further rate cuts as they have to deal with growing concerns about possible changes to immigration and tariff policies in an economy where growth is already slowing,” they wrote. “Meanwhile, increased focus on the deficit and increased prospects for a Republican sweep could put upward pressure on long-term premiums.”
There’s much debate about whether the timing of an election will affect the Fed’s policy choices, but history shows the U.S. central bank hasn’t refrained from acting at that time, according to Komsong Silapachai of Sage Advisory.
In commodities, crude oil traded near a two-month high as traders kept an eye on rising geopolitical risks in Europe and the Middle East and hurricanes in the Caribbean. Among other commodities, gold held on to modest gains.
Major events this week:
Some of the key market developments:
stock
currency
Cryptocurrency
Bonds
merchandise
This story was produced with assistance from Bloomberg Automation.
This article has been generated from an automated news agency feed without any modifications to the text.
3.6 Million Indians visited us in a single day and chose us as their platform for Indian General Election Results. Check out the latest updates here!
