(Bloomberg) — Asian shares are expected to open mixed as U.S. stock futures swayed after the assassination attempt on President Donald Trump boosted expectations he would win the November election.
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S&P 500 contracts were little changed in early Asian trading. The U.S. dollar edged up against most currencies. Bitcoin surged above $60,000 following the attack.
US Treasury spot trading is suspended in Asia due to a Japanese holiday. US Treasury futures fell, suggesting yields will rise when spot trading opens in London. Australian government bond yields edged lower.
“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.”
Images of a defiant Trump with his fist raised above his head and blood coming from his right ear circulated after Saturday’s attack, boosting his chances of becoming president again, according to data from PredictIt.
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 weak inflation, sluggish consumption and a plummeting housing market, according to Bloomberg Intelligence. The decision comes just after President Xi Jinping is due to convene the first day of the Third Central Committee Plenary Session, with economic activity indicators including GDP, retail sales and industrial production 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 8:24 a.m. Tokyo time.
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Hang Seng futures fell 0.5%
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S&P/ASX 200 futures up 0.6%
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 158.37 yen to the dollar.
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The offshore yuan weakened 0.1% to 7.2803 yuan per dollar.
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The Australian dollar fell 0.2% to $0.6769.
Bonds
Cryptocurrency
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Bitcoin rose 1.7% to $61,161.39.
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Ether rose 2.1% to $3,266.77.
merchandise
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West Texas Intermediate crude rose 0.2% to $82.38 a barrel.
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Spot gold fell 0.2% to $2,406.21 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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