(Times Of Update) — The dollar fell and Asian stocks tumbled after Joe Biden ended his reelection campaign and endorsed Vice President Kamala Harris. China’s central bank cut a short-term interest rate.
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The Times Of Update U.S. currency index fell 0.1% on Monday after the president bowed to pressure from Democrats, as the yen and Swiss franc appreciated. The Mexican peso also climbed. U.S. stock futures rose while 10-year Treasury yields fell in Asia.
Stock markets fell from Japan to South Korea and Australia. Hong Kong stock futures pointed to a steady opening. The People’s Bank of China cut the cost of borrowing on a people’s money market loan for the first time in nearly a year, strengthening its support for growth while moving toward a new policy benchmark.
Investors have been mulling for weeks the increased odds of Donald Trump winning the November election after Biden’s weak debate performance, but bets on a Trump victory have increased in the past week after an assassination attempt on the Republican candidate a week ago. The question for investors is whether to continue making such trades now that Biden has dropped his reelection bid.
“Asian markets will be under scrutiny as they face major surprises for the second week in a row,” said Hebe Chen, an analyst at IG Markets. “The accelerating wave of risk aversion could hit Asian stocks harder than last week as investors digest an unusual political backdrop. The FX market will also feel increased pressure.”
On the commodities side, oil and gold rose at the start of trading on Monday.
The S&P 500 index fell 0.7% on Friday, capping its worst week since April. Technology stocks fell ahead of earnings this week, while CrowdStrike Holdings Inc., the company behind a massive computer outage that grounded flights and disrupted businesses worldwide, fell as much as 15% before paring losses.
Tesla Inc. and Alphabet Inc. will be the first of the “Marvelous Seven” to report results on Tuesday. Analysts will likely quiz Elon Musk’s electric-vehicle giant on the progress of its robotaxis plans. And investors will be poring over details of how Google’s parent company is boosting revenue with artificial intelligence.
President Xi Jinping unveiled an ambitious plan over the weekend to shore up the finances of China’s indebted local governments, as the ruling Communist Party announced its long-term plan for the world’s second-largest economy. The measures aim to shift more revenue from the central government to local governments, such as by allowing regional governments to collect a larger share of the consumption tax.
“Like most such documents, it fails to explain how China’s leaders intend to achieve these goals, many of which require inherently contradictory policies,” said Bob Savage, head of market strategy and analysis at BNY Mellon. “The contradiction between China’s growth and stability looms large over Asia-Pacific markets…
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