Asian Stocks Ready for Mixed Open on Trump-Win Bets: Markets Round

(Bloomberg) — Asian stocks were set for a mixed open as U.S. stock futures fluctuated after the attempted assassination of Donald Trump boosted speculation that his chances of winning November’s presidential election have increased.

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S&P 500 contracts were little changed in early trading in Asia. The US dollar rose sharply against most currencies. Bitcoin reached the $60,000 mark after the attack.

Cash trading in US bonds is closed in Asia due to a holiday in Japan. U.S. Treasury futures fell, indicating yields will rise when cash trading begins in London. Australian government bond yields fell slightly.

“Not responding may be the smartest thing you can do,” says Oliver Pursche of Wealthspire Advisors. “Markets will find their equilibrium and return to the things that matter from an investment perspective, namely economic growth, monetary and fiscal policy and corporate profits.”

In the aftermath of Saturday’s attack — which included images of a defiant Trump with his fist above his head and his right ear bloodied — the chances of him becoming president again increased, according to data from PredictIt.

It is generally believed that Trump’s support for looser fiscal policy and higher rates will benefit the dollar and weaken government bonds. Yields rose in the wake of Joe Biden’s poor debate performance last month, highlighting the sensitivity of government bonds – especially longer-term securities.

Traders are now grappling with how much of the impact has already been priced into markets as Trump’s election chances steadily rise. Monday’s action also follows what many see as a watershed week in the Federal Reserve’s fight against inflation, with economic reports reinforcing bets on two rate cuts in 2024.

“It is surprising that markets have not responded more to the increased uncertainty caused by the Trump assassination attempt in early trading hours,” said Lloyd Chan, strategist at MUFG in Singapore. “The US dollar may still be under pressure from dovish market expectations for Fed rate cuts, following a run of cooler price pressures and weaker US economic data.”

Other assets positively linked to the so-called Trump trade include shares of energy companies, private prisons, credit card companies and health insurers. Renewable energy stocks could suffer. Bitcoin could rise further given both its appeal to investors looking for cover from political turmoil away from conventional financial assets, and Trump’s pro-crypto stance.

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“From a market perspective, I would suggest that if Trump emerges as an even clearer winner, we should see the bear steepener we saw after the debate,” said Michael Purves of Tallbacken Capital. “On equities, I don’t think this changes the trajectory at an overall level, although some equities will benefit from lower corporate taxes and less regulation.”

China

As the fallout from the Trump shooting subsides, traders will focus on the People’s Bank of China’s key interest rate decision and the start of a behind-closed-doors conclave that is expected to determine long-term policy on a wide range of economic and political issues.

According to Bloomberg Intelligence, the one-year medium-term lending facility is expected to remain unchanged at 2.5% as the central bank focuses on currency stability despite weak inflation, sluggish consumption and the housing crisis. Shortly after the decision, measurements of economic activity, including GDP, retail sales and industrial production, will also take place when President Xi Jinping convenes the first day of the Third Plenum.

“Expectations are low that the meeting will lead to breakthrough policy initiatives and materially boost confidence in the Chinese economy,” Commonwealth Bank of Australia strategists led by Joseph Capurso wrote. “That said, markets will be closely watching to see if the government signals more demand-side policies, for example to boost consumer spending or infrastructure spending, which could boost the Chinese yuan, Australian dollar and New Zealand Zeeland dollar.”

Main events this week:

• Industrial production in the eurozone, Monday

• American Empire State Manufacturing, Monday

• Goldman Sachs earnings results Monday

• Jerome Powell will be interviewed by David Rubinstein on Monday

• The Fed’s Mary Daly will speak Monday

• Germany ZEW survey expectations, Tuesday

• US retail sales, corporate stocks, Tuesday

• Morgan Stanley, Bank of America earnings, Tuesday

• The Fed’s Adriana Kugler will speak on Tuesday

• Eurozone CPI, Wednesday

• Start of the US housing market, industrial production, Wednesday

• Fed Beige Book, Wednesday

• The Fed’s Thomas Barkin will speak on Wednesday

• ECB interest rate decision, Thursday

• US Initial Unemployment Claims, Philadelphia Fed Production, Conference Board LEI, Thursday

• The Fed’s Mary Daly, Lorie Logan and Michelle Bowman will speak Thursday

• Feds John Williams and Raphael Bostic will speak Friday

Some of the major moves in the markets:

Shares

• Futures on the S&P 500 were little changed at 8:24 a.m. Tokyo time

• Hang Seng futures fell 0.5%

• S&P/ASX 200 futures rose 0.6%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.2% to $1.0885

• The Japanese yen fell 0.3% to 158.37 per dollar

• The offshore yuan fell 0.1% to 7.2803 per dollar

• The Australian dollar fell 0.2% to $0.6769

Bonds

Cryptocurrencies

• Bitcoin rose 1.7% to $61,161.39

• Ether rose 2.1% to $3,266.77

Raw materials

• West Texas Intermediate crude rose 0.2% to $82.38 a barrel

• Gold fell 0.2% to $2,406.21 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Ruth Carson, Allegra Catelli, Jessica Menton, and Esha Dey.

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