(Bloomberg) — Asian shares were mixed as the U.S. dollar strengthened on views that the assassination attempt on President Donald Trump made him more likely to win the presidential election.
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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.
To be sure, with nearly four months left in the US election campaign, there is still plenty of room for surprises.
Traders are also grappling with how much of a steadily increasing chance of a Trump presidency is priced into the market.Monday’s moves came after a week that many saw as a turning point in the Federal Reserve’s fight against inflation, with economic data suggesting 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:
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Eurozone industrial production on Monday
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US Empire State Manufacturing, Monday
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Goldman Sachs Earnings Monday
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Jerome Powell was interviewed by David Rubinstein on Monday.
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Federal Reserve Chair Mary Daly to speak Monday
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German ZEW survey forecast, Tuesday
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U.S. retail sales, business inventories Tuesday
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Morgan Stanley, Bank of America earnings Tuesday
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Federal Reserve President Adriana Kugler to speak Tuesday
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Eurozone Consumer Price Index, Wednesday
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US housing starts, industrial production Wednesday
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Fed Beige Book, Wednesday
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Fed President Thomas Barkin to speak Wednesday
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ECB interest rate decision Thursday
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US initial jobless claims, Philadelphia Fed manufacturing index, Conference Board LEI, Thursday
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Federal Reserve Board members Mary Daly, Laurie Logan and Michelle Bowman to speak Thursday
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Fed’s John Williams and Raphael Bostic to speak on Friday
Some of the key market developments:
stock
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S&P 500 futures were little changed as of 9:05 a.m. Tokyo time.
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Hang Seng futures fell 0.5%
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Australia’s S&P/ASX 200 rose 0.4%
currency
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The Bloomberg Dollar Spot Index rose 0.2%.
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The euro fell 0.2% to $1.0885.
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The Japanese yen weakened 0.3% to 158.30 yen per dollar.
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The offshore yuan weakened 0.2% to 7.2858 yuan per dollar.
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The Australian dollar fell 0.3% to $0.6765.
Cryptocurrency
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Bitcoin rose 1.2% to $60,858.72.
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Ether rose 1.4% to $3,245.73.
Bonds
merchandise
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West Texas Intermediate crude oil fell 0.1% to $82.12 a barrel.
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Spot gold fell 0.2% to $2,407.56 an ounce.
This story was produced with assistance from Bloomberg Automation.
–With assistance from Ruth Carson, Allegra Catelli, Jessica Menton, and Esha Dey.
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