Asian markets drop as Biden drops out of presidential race
Asian markets fell Monday as Joe Biden’s decision to drop out of the US presidential race fuelled fresh uncertainty, while traders appeared unmoved by China’s decision to cut interest rates in a bid to boost its stuttering economy.
After last weekend’s assassination attempt on Donald Trump — and the following Republican convention — boosted bets he would win November’s election, investors were trying to work out the ramifications of the latest news out of the White House.
Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei, Mumbai, Wellington and Manila all fell, though Hong Kong rallied thanks to healthy gains in Chinese tech firms.
London, Frankfurt and Paris all rose at the open.
Stephen Innes said in his Dark Side Of The Boom commentary: “It’s as if the political game of chess has flipped its board, and investors are left picking up the pieces.
“This unexpected twist has injected a hefty dose of political uncertainty into the market, leaving everyone scrambling to determine their next move.”
The developments out of Washington have overshadowed optimism that the Federal Reserve will cut interest rates as soon as September and possibly again before January.
Biden on Sunday gave in to weeks of calls for him to step aside in the wake of a poor debate performance that amplified questions about his health, and endorsed Vice President Kamala Harris to succeed him.
The news has left traders wondering who will go head to head with Trump, whose expected victory had lifted equities and the dollar on expectations for tax cuts and deregulation.
Analysts said markets would likely be volatile in the near term.
“While market instinct will be to say that the news adds a degree of uncertainty to the outcome of the 5 November election that wasn’t present last week, it will be many weeks… before anyone can reasonably determine if the race for the White House is significantly narrower than looked to be case previously,” said National Australia Bank’s Ray Attrill.
“In short, there’ll be more noise than signal on US politics for markets to contend with in the coming few weeks at least.”
Stocks in Asia fell Monday following losses on Wall Street and in Europe, where trade was dominated by a crash in global computer systems — the result of a faulty update to an antivirus program — that hit airports, airlines, trains, banks, shops and even doctors’ appointments.
There was little reaction to news that China’s central bank had cut borrowing costs as leaders look to kickstart the world’s number two economy, which has been hammered by a huge property crisis and weak consumer demand.
The Bank of China lowered the one-year and five-year loan prime rates in a bid to encourage commercial banks to grant more credit.
The decision comes after a closely watched meeting last week of leaders concluded with few major announcements, bar vows to tackle “risks” in the economy.
However, officials pledged Friday to help ease debt pressure on local governments through reforms to the tax system.
Worries about local government finances have been growing for years and have been made worse by a chronic real estate debt crisis, and in April ratings agency Fitch lowered its outlook on China’s sovereign credit.
– Key figures around 0715 GMT –
Tokyo – Nikkei 225: DOWN 1.2 per cent at 39,599.00 (close)
Hong Kong – Hang Seng Index: UP 1.3 per cent at 17,639.71
Shanghai – Composite: DOWN 0.6 per cent at 2,964.22 (close)
London – FTSE 100: UP 0.6 percent at 8,200.51
Euro/dollar: DOWN at $1.0881 from $1.0885 on Friday
Pound/dollar: UP at $1.2917 from $1.2914
Dollar/yen: UP at 156.50 yen from 157.47 yen
Euro/pound: UP at 84.23 pence at 84.27 pence
West Texas Intermediate: UP 0.5 per cent at $80.49 per barrel
Brent North Sea Crude: UP 0.4 per cent at $82.97 per barrel
New York – Dow: DOWN 0.9 per cent at 40,287.53 (close)
AFP
