Investors in Asian markets faced a mixed day on Tuesday as they tried to build on the recent positive momentum from Wall Street. The tech sector saw a rebound after last week’s losses, while attention shifted to the upcoming release of crucial US inflation data.
Although Joe Biden’s decision to withdraw from the presidential race and endorse Vice President Kamala Harris didn’t have a major impact on sentiment, there is speculation about who Harris will choose as her running mate.
Analysts cautioned that the road ahead is likely to be turbulent in the coming months.
Saira Malik at Nuveen mentioned that Biden’s exit from the presidential race “adds even more uncertainty to an already tumultuous 2024 geopolitical landscape.”
“Mr. Biden announced his endorsement for Kamala Harris, but the exact path forward remains uncertain.
“If this news boosts former President Trump’s poll numbers, it could further benefit areas of the market that have been anticipating a Republican sweep in November.
“One thing is certain: There will be more twists and turns on the political roller coaster in the months ahead.”
Traders are also looking for more policy announcements to stimulate the slowing Chinese economy following last week’s Third Plenum of leaders, which revealed limited measures except a commitment to support local governments financially.
The week started on a positive note after a sell-off last week driven by a tech retreat due to profit-taking and reports of a potential crackdown by the White House on firms supplying chip technology to China.
Optimism for another strong earnings season, especially among semiconductor companies, led to gains on Monday, with companies like Nvidia, Broadcom, and Texas Instruments seeing a rise in their stock prices.
This week will see earnings reports from Google parent Alphabet, Tesla, and Spotify.
Tech companies have been driving the market rally this year, pushing major indexes in New York to multiple record highs, fueled by expectations of Federal Reserve interest rate cuts.
After last week was dominated by the US election and the attempted assassination of Donald Trump, the focus is back on the central bank’s monetary policy ahead of Friday’s personal consumption expenditure report, the Fed’s preferred measure of inflation.
All three main indexes in New York saw gains, with the S&P 500 and Nasdaq both rising over one percent.
Asia followed suit on Tuesday morning, but some markets struggled to sustain their gains.
Tokyo closed flat, while markets in Hong Kong, Shanghai, Mumbai, Bangkok, and Jakarta experienced losses. On the other hand, markets in Sydney, Seoul, Singapore, Wellington, Manila, and Taipei saw gains.
In the currency markets, the dollar weakened against the yen ahead of the Bank of Japan’s policy meeting next week, which some believe could result in another interest rate hike.
The dollar’s recent softening against the yen was influenced by two factors, according to OANDA’s Kelvin Wong.
“Firstly, there is an increased likelihood of a more dovish stance from the US Federal Reserve in September after weak US economic data on spending and inflation.
Secondly, in a recent interview with Donald Trump, he hinted at preferring a weaker US dollar against the Japanese yen and Chinese yuan to improve US export competitiveness.”
Shares of Seoul-listed Kakao dropped over five percent following news of the arrest of the company’s billionaire founder, Kim Beom-su, on allegations of stock price manipulation during the acquisition of K-pop giant SM Entertainment.
– Key figures around 0715 GMT –
Tokyo – Nikkei 225: FLAT at 39,594.39 (close)
Hong Kong – Hang Seng Index: DOWN 0.9 percent at 17,476.49
Shanghai – Composite: DOWN 1.7 percent at 2,915.37 (close)
London – FTSE 100: DOWN 0.3 percent at 8,172.10
Euro/dollar: DOWN at $1.0884 from $1.0890 on Monday
Pound/dollar: DOWN at $1.2919 from $1.2929
Dollar/yen: DOWN at 156.54 yen from 157.08 yen
Euro/pound: UP at 84.25 pence at 84.20 pence
West Texas Intermediate: FLAT at $78.38 per barrel
Brent North Sea Crude: UP 0.1 percent at $82.47 per barrel
New York – Dow: UP 0.3 percent at 40,415.44 (close)
dan/mtp
