(Bloomberg) — Asian shares dropped, shrugging off gains on Wall Street, as bets on a second Donald Trump term following his running mate announcement trigger further trade and geopolitical concerns.
Most Read from Bloomberg
The MSCI AC Asia Pacific index fell 0.2%, set for its third day of losses. Stocks in Hong Kong declined the most in the region, while some stocks in China remained lower in anticipation that Trump’s tariffs will be implemented. Shares in Japan rose, with exporters benefiting from the yen’s decline.
US futures edged higher in Asia Tuesday as traders priced a greater chance of a Trump win after he survived an assassination attempt. The dollar strengthened against most of its Group-of-10 peers. Among the currencies in the group, the yen declined the most against the dollar on wagers that the Japanese currency will remain weak during Trump’s second term.
Investors have been allocating based on which countries will be seen as friends or foes by Trump, said Kyle Rodda, a senior analyst at Capital.com in Melbourne. “His view of the world is fairly zero sum” with Japan seen on friendly terms and China in the “bad books,” he said in an interview. “There’s definitely still that figurative pairs trade going on at the moment, which is long Japan and short China.”
Outflows across US exchange-traded funds tracking Chinese equities persisted for a sixth-straight week, as weaker economic data and implications of a Trump victory spooked investors — even before Saturday’s assassination attempt. The world’s second largest economy recorded net outlfows of $229.4 million from this group of ETFs last week.
New tariffs of 60% on all Chinese exports to the US would more than halve China’s annual growth rate, according to new research from UBS Group AG, underscoring the risks for Beijing if Trump returns to the White House. Senator JD Vance of Ohio, Trump’s pick for his running mate, tells Fox News that China is the biggest threat to the US.
Meantime, China’s central bank injected the most amount of cash into its banking system since January to keep liquidity plentiful as tax payments mount and the country’s leaders meet to set the economic agenda. The nation also saw its manufacturing sector grow faster than the overall economy for a third quarter in a row, underscoring how industry and exports are driving growth in the world’s second-largest economy.
In corporate news, Energy Absolute Pcl shares tumbled as much as 30% in Thailand after the biodiesel product developer’s founder and chief executive quit over a fraud probe and its credit rating was slashed to junk.
Back in the US, the Dow Jones Industrial Average hit an all-time high as Trump named JD Vance as his running mate. Trump Media & Technology Group Corp. soared 31%. Trump’s rising odds of victory also boosted oil producers, gun makers and private prisons. His pro-cryptocurrency stance lifted the industry. Solar firms sank as Democrats are seen as more friendly toward the sector.
Vance is 39, nearly four decades younger than Trump, 78, offering a fresh voice to Republican efforts to bolster their appeal to the working-class workers who were once a bedrock of the Democratic party in battlegrounds such as Michigan, Wisconsin and Pennsylvania.
“The decision is crucial because one-third of US presidents throughout American history have previously occupied the position of vice president,” said Tom McLoughlin at UBS Global Wealth Management. “Moreover, in this instance, Trump’s decision effectively anoints Vance as his successor in terms of delivering a populist message to a younger generation of voters.”
US 10-year bond yields edged lower ahead of the nation’s retail sales data due later Tuesday. New Zealand’s yields dropped as traders focus on the country’s second quarter inflation data Wednesday that may impact the central bank’s monetary policy.
Federal Reserve Chair Jerome Powell said in an interview that second-quarter economic data has provided policymakers greater confidence that inflation is heading down to the central bank’s 2% goal, possibly paving the way for near-term interest-rate cuts. He made clear he didn’t intend to send any specific message about the timing of rate reductions.
In commodities, oil steadied after a two-day decline in quiet summer trading, with the outlook for the US dollar and monetary policy in focus. Gold rose for a second day.
Key events this week:
-
US retail sales, Tuesday
-
Morgan Stanley, Bank of America earnings, Tuesday
-
Fed’s Adriana Kugler speaks, Tuesday
-
Eurozone CPI, Wednesday
-
US housing starts, industrial production, Wednesday
-
Fed Beige Book, Wednesday
-
Fed’s Thomas Barkin speaks, Wednesday
-
ECB rate decision, Thursday
-
US initial jobless claims, Philadelphia Fed manufacturing, Conference Board LEI, Thursday
-
Fed’s Mary Daly, Lorie Logan and Michelle Bowman speak, Thursday
-
Fed’s John Williams, Raphael Bostic speak, Friday
Some of the main moves in markets:
Stocks
-
S&P 500 futures rose 0.2% as of 1:32 p.m. Tokyo time
-
Nasdaq 100 futures rose 0.3%
-
Japan’s Topix rose 0.5%
-
Australia’s S&P/ASX 200 fell 0.2%
-
Hong Kong’s Hang Seng fell 1.4%
-
The Shanghai Composite fell 0.2%
-
Euro Stoxx 50 futures fell 0.3%
Currencies
-
The Bloomberg Dollar Spot Index rose 0.1%
-
The euro was little changed at $1.0893
-
The Japanese yen fell 0.4% to 158.69 per dollar
-
The offshore yuan was little changed at 7.2784 per dollar
Cryptocurrencies
-
Bitcoin rose 1.2% to $64,567.59
-
Ether rose 0.8% to $3,461.36
Bonds
-
The yield on 10-year Treasuries declined two basis points to 4.21%
-
Japan’s 10-year yield declined 2.5 basis points to 1.020%
-
Australia’s 10-year yield declined seven basis points to 4.25%
Commodities
-
West Texas Intermediate crude fell 0.3% to $81.64 a barrel
-
Spot gold rose 0.2% to $2,426.50 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess, Masaki Kondo and Ruth Carson.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
