Asian shares were mixed as the US dollar strengthened on belief that President Donald Trump’s chances of winning the presidential election had increased following the assassination attempt.
A Bloomberg gauge of the dollar’s strength against major currencies rose 0.2% in Asia, while S&P 500 futures were little changed. U.S. Treasury futures fell, suggesting yields will rise when spot trading begins in London. Spot trading in U.S. Treasuries is closed in Asia for a Japanese holiday.
Australian and South Korean stocks rose, while Hong Kong futures fell early after the market opened. Australian government bond yields edged lower. Bitcoin surged above $60,000 following the attack.
“Not reacting may prove to be the wisest course of action,” said Oliver Paasche of Wealthspire Advisors. “Markets will regain balance and return to economic growth, monetary and fiscal policy and corporate earnings that matter from an investment perspective.”
Saturday’s attack has increased his chances of becoming president again, according to PredictIt data.
Trump’s support for fiscal easing and higher tariffs is generally seen as favorable for the dollar and weakening Treasuries. Yields rose sharply after Joe Biden’s poor performance in a debate last month, illustrating the sensitivity of Treasuries, especially longer-dated ones.
With Trump’s chances of winning steadily increasing, traders are now struggling to figure out how much of that impact is priced into the market.Monday’s moves came after a week in which many saw a turning point in the Federal Reserve’s fight against inflation, with economic reports reinforcing views of two interest rate cuts in 2024.
“We were surprised that the market did not react much to the heightened uncertainty caused by the assassination attempt on President Trump in the early hours of trading,” said Lloyd Chan, a strategist at MUFG in Singapore. “The dovish market expectations of a Fed rate cut following a string of weakening price pressures and weak U.S. economic data may still be weighing on the dollar.”
Other assets that have been linked to the so-called Trump trade include shares in energy companies, private prisons, credit card companies and health insurance companies. Renewable energy stocks could take a hit. Bitcoin could see further gains given its appeal to investors looking to move away from traditional financial assets and hedge against political turmoil, as well as Trump’s pro-cryptocurrency stance.
“From a market perspective, if Trump emerges as an even clearer winner, we could see another bear market surge like we saw after the debate,” said Michael Purves of Thorbakken Capital. “In terms of the stock market, some stocks will benefit from lower corporate taxes and less regulation, but on an overall level I don’t see the trajectory changing.”
China
As the impact of the shooting of President Trump fades, traders will be focusing on the People’s Bank of China’s key interest rate decision and the start of closed-door talks expected to set longer-term policy on a range of economic and political issues.
The one-year medium-term lending rate is expected to be kept unchanged at 2.5% as the central bank focuses on stabilizing the currency despite sluggish inflation, weak consumption and a plummeting housing market, according to Bloomberg Intelligence.
The decision comes shortly after President Xi Jinping convenes the first day of the third plenary session, when economic activity indicators including GDP, retail sales and industrial production are also due to be released.
“Expectations are low that the meeting will produce any groundbreaking policy outcomes or significantly boost confidence in the Chinese economy,” wrote Commonwealth Bank of Australia strategists led by Joseph Capurso. “That said, markets will be watching closely as any signs the government will further tighten demand-side policies, such as stimulating consumer spending and infrastructure investment, could boost the Chinese yuan, Australian dollar and New Zealand dollar.”
Major events this week:
Some of the key market developments:
stock
currency
Cryptocurrency
Bonds
merchandise
This story was produced with assistance from Bloomberg Automation.
With assistance from Ruth Carson, Allegra Catelli, Jessica Menton, and Esha Dey.
This article has been generated from an automated news agency feed without any modifications to the text.
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