Asian shares experienced a downturn on Wednesday, driven by concerns over China’s economic stability as investors prepare for a closely contested U.S. election. This election could significantly impact the world’s second-largest economy, despite Beijing’s efforts to bolster growth.
Gold prices surged to a record high of $2,784.82 per ounce, fueled by anxiety surrounding the U.S. presidential race. Bitcoin also approached its all-time peak, reflecting market speculation about a potential victory for Republican candidate Donald Trump.
The MSCI Asia-Pacific index, excluding Japan, fell to a one-month low, trading 1% lower as it tracked declines in Chinese assets. The CSI300 blue-chip index dropped 1.3%, and the Shanghai Composite Index decreased by 1%. Hong Kong’s Hang Seng Index slid 1.82%.
These movements occurred even as reports surfaced that China might approve over 10 trillion yuan ($1.4 trillion) in additional debt next week to stimulate its fragile economy. However, analysts expressed skepticism about the effectiveness of this stimulus package. Charu Chanana, chief investment strategist at Saxo, noted, “While there’s a stronger focus on supporting the property sector, there’s limited urgency to address broader structural issues like debt and demographics.”
Concerns among foreign investors were heightened by potential tariff threats if the upcoming U.S. elections result in a Republican sweep. The new energy vehicles index in China fell by 1.9%, partly due to the European Union’s decision to increase tariffs on Chinese-built electric vehicles to as much as 45.3%.
In Europe, EUROSTOXX 50 futures dropped 0.42%, and FTSE futures declined 0.45% ahead of a UK budget announcement, where Finance Minister Rachel Reeves is expected to unveil significant tax hikes.
In the U.S., stock futures showed slight gains, buoyed by strong quarterly results from Alphabet, Google’s parent company. Nasdaq futures rose 0.06%, while S&P 500 futures increased by 0.07%. Meta Platforms and Microsoft are set to report their earnings later today, with Apple and Amazon scheduled for Thursday.
In Asia, Japan’s Nikkei index climbed 0.9%, supported by a weaker yen. Bitcoin approached its previous peak of $73,803.25, trading at $72,479.00 and poised to gain 13% for the month. The cryptocurrency’s rise has been attributed to speculation that Trump could win the presidency again, as he is perceived to have a more favorable view of digital assets.
Manuel Villegas, a digital assets analyst at Julius Baer, stated, “Bitcoin’s strength should persist if the odds for a Republican sweep continue to grow, as a Democratic sweep could lead to a broader sell-off.”
On the economic front, investors are preparing for important U.S. data releases this week that may influence Federal Reserve policy. The ADP National Employment Report is expected later today, along with advance third-quarter GDP estimates, ahead of Friday’s nonfarm payroll figures. Recent data indicated a drop in U.S. job openings to a more than three-and-a-half-year low in September.
Khoon Goh, head of Asia research at ANZ, emphasized the significance of upcoming U.S. data, stating, “The U.S. data is still important for this week, there’s no doubt about it.”
The dollar remained close to a three-month high against a basket of currencies, although its recent rally stalled, providing some relief to the pound above the $1.30 level. The yen lingered near a three-month low, impacted by the loss of a parliamentary majority for Japan’s ruling coalition in recent elections. The Australian dollar remained largely unchanged following domestic inflation data, edging down 0.26% to $0.6543.
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