Asian markets experienced a mixed session on Monday as investors assessed the aftermath of an attempted assassination on Donald Trump alongside economic data suggesting a potential boost to his re-election prospects.
Attention also centered on a crucial meeting of China’s top leadership in Beijing, where expectations were high for measures aimed at stimulating the world’s second-largest economy, which reported growth below expectations in the second quarter.
Investors grappled with extending the previous week’s rally on Wall Street, where all major indexes closed positively despite a higher-than-expected reading on US wholesale prices. The figures, however, failed to overshadow news from Thursday that the consumer price index had slowed more than anticipated in June, reinforcing expectations for a Federal Reserve interest rate cut in September.
Federal Reserve Chairman Jerome Powell’s recent remarks to lawmakers, suggesting a willingness to cut rates regardless of inflation hitting the target, added further weight to market expectations.
Meanwhile, focus intensified on domestic developments following an attempt on Trump’s life during a rally ahead of the Republican convention. Despite rising odds in favor of Trump defeating President Joe Biden in recent weeks, the incident provided an additional boost to his electoral prospects.
Analysts speculated that a Trump victory could potentially result in lower corporate taxes, benefiting companies’ profitability but potentially escalating trade tensions with China and the imposition of fresh tariffs.
Katrina Ell, an analyst at Moody’s Analytics, noted, “The assassination attempt might temporarily boost Trump’s polling numbers, but the situation remains fluid leading up to November. Financial markets are expected to refocus on the Federal Reserve and the increasing likelihood of a rate cut in September.”
In trading, the dollar strengthened on Monday after softening the previous week on expectations of lower interest rates, while equity markets showed a mixed performance. Hong Kong, Shanghai, Seoul, Taipei, and Jakarta experienced declines, while Sydney, Singapore, Manila, and Wellington saw gains.
Official data from China highlighted that the economy expanded by 4.7 percent in the second quarter, falling short of the 5.1 percent forecasted in a Bloomberg survey. Separate data indicated a significant slowdown in retail sales in June, reflecting cautious consumer spending amidst economic uncertainties.
These figures underscore the challenges facing Chinese leaders as they confront issues such as a real estate debt crisis, subdued consumer spending, an aging population, and ongoing trade tensions with Western nations.
President Xi Jinping and other senior leaders convened in Beijing to devise strategies aimed at revitalizing growth. However, analysts cautioned against anticipating major short-term announcements.
“A Trump victory would pose challenges for China’s economy given its reliance on manufacturing and exports for recovery,” Ell added. “Trump has signaled intentions to impose substantial trade barriers on China during his tenure.”
This cautious sentiment dominated markets as they awaited further developments in both geopolitical events and economic policy decisions affecting global trade and financial stability.
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