Investing.com — Most Asian stocks fell on Monday amid uncertainty about how the change in U.S. leadership will affect the region. Even a surprise interest rate cut in China wasn’t enough to lift market morale.
Regional markets are still digesting US President Joe Biden’s sudden decision to forgo reelection and instead endorse Vice President Kamala Harris, who will likely face off against Republican nominee Donald Trump.
Wall Street futures initially rose after Biden’s decision but gave up most of the gains in Asian trading.
The secular decline in technology stocks has also weighed on Asian markets, where a combination of profit-taking and a shift to cyclical sectors has led to a sharp sell-off in tech shares.
Chinese stocks fall amid Trump uncertainty, offsetting rate cuts
China’s composite stock price index and inflation index fell 0.7 percent each on Monday, with little support from an unexpected cut in benchmark domestic borrowing costs.
The People’s Bank of China unexpectedly slashed preferential lending rates, further slashing interest rates to record lows in a bid to support economic growth.
But the move did little to improve sentiment toward the Chinese market, which has plummeted in recent weeks amid growing speculation about President Trump’s reelection.
Trump, who was ahead of Biden and Harris in the polls according to CBS data last week, maintains a largely negative stance on China, whose administration slapped steep tariffs on China and sparked a trade war with Beijing in the late 2010s.
A similar scenario could play out in a second term for President Trump, which would bode ill for the world’s second-largest economy.
Concerns about China weighed on other regional markets, with Australia, which has close trading ties with Beijing, falling 0.8 percent.
Tech stocks slump and political uncertainty rock Asian markets
Asian markets across the board fell on Monday, extending sharp losses from last week as political uncertainty and a sell-off in tech stocks weighed on regional markets.
Japanese stocks fell 1.1% and South Korean stocks dropped 0.9%, with the latter dropping 1.2% due to a big drop in major semiconductor makers.
Taiwan’s stock index plunged 3%, extending recent losses on uncertainty about how the new U.S. administration will handle Taiwan’s ties with China. Chipmaker TSMC (TW:) (NYSE:) fell 3%, extending losses despite reporting strong second-quarter profits.
Indian stocks were hit by a wave of profit-taking in recent trade, with Indian stock index futures signalling a weak start.
Hong Kong’s index was Asia’s only unusual gainer, rising 0.4% on bargain-basement buying of big technology stocks. It had slumped to its lowest in nearly three months early in trading.
