(Bloomberg) — Asian stocks were mixed as the U.S. dollar rose after the assassination attempt on Donald Trump bolstered bets that his chances of winning the presidential election have increased.
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A Bloomberg gauge of the greenback’s strength against major peers rose 0.2% in Asia, while S&P 500 contracts were little changed. U.S. Treasury futures fell, indicating that yields will rise when money trades begin in London. Cash trading in US Treasuries is closed in Asia due to a holiday in Japan.
Australian and South Korean shares rose while Hong Kong futures showed an early loss at the market open. Australian bond yields fell. Bitcoin hit $60,000 after the attack.
“Not reacting may be the smartest thing you can do,” said Oliver Pursche at Wealthspire Advisors. “Markets will find their equilibrium and return to the things that matter from an investment perspective, which are economic growth, monetary and fiscal policy and corporate earnings.”
After Saturday’s attack, the odds of him becoming president again increased, according to PredictI data.
Trump’s support for looser fiscal policy and higher tariffs are generally seen as likely to benefit the dollar and weaken Treasuries. Yields rose in the wake of Joe Biden’s poor debate performance last month, showing the sensitivity of Treasuries — especially longer-dated securities.
To be sure, there is still plenty of room for surprises with nearly four months to go in the US election campaign.
Traders are also now grappling with how much of the impact has already been priced into the markets as the odds of a Trump election steadily increased. Monday’s action also follows what many saw as a crucial week in the Federal Reserve’s fight against inflation, with economic reports bolstering bets for two rate cuts in 2024.
“It is surprising that markets have not reacted more to the increased uncertainty resulting from the assassination attempt on Trump in the early trading hours,” Lloyd Chan, a strategist at MUFG in Singapore. “It could be that the US dollar is still being weighed down by weaker market expectations for a Fed rate cut after a string of cooler price pressures and weaker US economic data.”
Other assets positively associated with the so-called Trump trade include shares of energy firms, private prisons, credit card companies and health insurers. Renewable energy stocks could suffer. Bitcoin could rise further, given its appeal to investors seeking a hedge against political unrest away from conventional financial assets, and Trump’s pro-crypto stance.
“From a markets perspective, I would suggest that if Trump emerges as an even more obvious winner, then we should see the strongest bear we saw after the debate,” said Michael Purves at Tallbacken Capital. “In terms of stocks, I don’t think this changes the trajectory overall, although some stocks will benefit from lower corporate taxes and lower regulation.”
China
As the fallout from Trump’s crackdown subsides, traders will focus on the People’s Bank of China’s key rate decision and the start of a closed-door conclave expected to set long-term policy on a wide range of economic and political issues.
One-year medium-term lending is expected to be held unchanged at 2.5% as the central bank focuses on currency stability despite weak inflation, sluggish consumption and falling housing, according to Bloomberg Intelligence.
Shortly after the decision, readings on economic activity including GDP, retail sales and industrial production will also be expected as President Xi Jinping convenes on the first day of the Third Plenum.
“Expectations are low that the meeting will lead to innovative policy initiatives and materially boost confidence about the Chinese economy,” Commonwealth Bank of Australia strategists led by Joseph Capurso wrote. “That said, markets will be closely watching whether the government signals more demand-side policies, for example to stimulate consumer spending or infrastructure spending, which could give a boost to the Chinese yuan, Australian dollar and dollar of New Zealand.”
This week’s highlights:
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Eurozone industrial production, Monday
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US Empire State Manufacturing, Monday
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Goldman Sachs earnings on Monday
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Jerome Powell was interviewed by David Rubinstein on Monday
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The Fed’s Mary Daly speaks, Monday
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Germany’s ZEW survey expectations on Tuesday
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US retail sales, business inventories, Tuesday
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Morgan Stanley, Bank of America earnings, Tuesday
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The Fed’s Adriana Kugler speaks on Tuesday
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Eurozone CPI, Wednesday
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US housing starts, industrial production on Wednesday
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Fed Beige Book, Wednesday
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Fed Thomas Barkin of the Fed on Wednesday
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ECB rate decision on Thursday
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Initial US Jobless Claims, Philadelphia Fed Production, LEI Conference Board, Thursday
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The Fed’s Mary Daly, Lorie Logan and Michelle Bowman speak Thursday
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Fed John Williams, Raphael Bostic speak on Friday
Some of the main movements in the markets:
INVENTORY
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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%
currencies
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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 fell 0.3% to 158.30 per dollar
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The offshore yuan fell 0.2% to 7.2858 per dollar
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The Australian dollar fell 0.3% to $0.6765
Cryptocurrencies
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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
wares
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West Texas Intermediate crude fell 0.1% to $82.12 a barrel
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Gold in the country fell 0.2% to $2,407.56 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Ruth Carson, Allegra Catelli, Jessica Menton and Esha Dey.
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