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Asia shares stumble on China anxiety; gold and bitcoin rally
Global Banking & Finance Review®
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By Rae Wee
SINGAPORE (Reuters) -Asia shares eased on Wednesday on the back of weakness in China, as investors brace for a tightly contested U.S. election that could have huge ramifications for the world’s second-largest economy, even as Beijing steps up efforts to shore up growth.
Gold rose to an all-time high of $2,784.82 an ounce as jitters over the close U.S. presidential race supported the yellow metal. Bitcoin also flirted with a record peak as markets weigh the prospect of a victory by Republican candidate Donald Trump.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell to a one-month trough and last traded 1% lower, tracking a decline in Chinese assets.
The CSI300 blue-chip index slumped 1.3%, while the Shanghai Composite Index lost 1%. Hong Kong’s Hang Seng Index slid 1.82%.
The moves came even as Reuters reported on Tuesday that China is considering approving next week the issuance of more than 10 trillion yuan ($1.4 trillion) in extra debt in the next few years to revive its fragile economy.
China’s latest stimulus package appears underwhelming, with 60% allocated to local government debt relief,” said Saxo’s chief investment strategist Charu Chanana.
“While there’s a stronger focus on supporting the property sector, urgency around broader structural issues – such as debt, deflation, and demographics – remains limited.
“Foreign investors are still highly concerned about potential tariff threats if next week’s U.S. elections result in a Republican sweep.”
China’s new energy vehicles index fell 1.9%, weighed down in part by news that the European Union has decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3%.
Elsewhere, EUROSTOXX 50 futures fell 0.42% and FTSE futures lost 0.45% ahead of a UK budget expected later in the day, where finance minister Rachel Reeves will announce what may be the biggest tax hikes in three decades.
U.S. stock futures ticked higher, buoyed by a solid result from Google-parent Alphabet, which reported quarterly revenue that beat estimates.
Nasdaq futures edged up 0.06%, while S&P 500 futures tacked on 0.07%.
Meta Platforms and Microsoft report their earnings later in the day, followed by Apple and Amazon.com on Thursday. [.N]
In Asia, Japan’s Nikkei rose 0.9%, riding on the momentum of a weaker yen. [.T]
U.S. FOCUS
Bitcoin stood just a whisker away from its peak of $73,803.25 and last bought $72,479.00, on track to gain 13% for the month.
The world’s largest cryptocurrency has been bolstered by trades betting that Trump could be president again, although he is still neck and neck with Vice President Kamala Harris in several polls.
Trump is seen taking a more favourable stance towards digital assets.
“Bitcoin’s strength should persist if the odds for a Republican sweep continue to grow, as a less likely Democratic sweep might meet a generalised sell-off,” said Manuel Villegas, digital assets analyst at Julius Baer.
On the economic front, investors were also bracing for a slew of U.S. data this week that could guide the outlook for Federal Reserve policy.
The ADP National Employment Report is due later in the day alongside advance third quarter GDP estimates, which will come ahead of Friday’s nonfarm payrolls figures.
Data on Tuesday showed U.S. job openings dropped to more than a 3-1/2-year low in September.
“The U.S. data is still important for this week, there’s no doubt about it,” said Khoon Goh, head of Asia research at ANZ.
“We saw the JOLTS data out last night, it showed continued moderation of the labour market … Today we have ADP, Q3 GDP, PCE deflator tomorrow and then payrolls Friday. So that will still be really important, particularly for the long-end yields and the impact on the dollar.”
The dollar strayed not too far from a three-month high against a basket of currencies on Wednesday, though a stall in its recent rally gave sterling some respite above the $1.30 level.
The yen languished near a three-month low as it continued to feel the pressure from the loss of a parliamentary majority for Japan’s ruling coalition in weekend elections.
The Aussie was little changed in the wake of domestic inflation data and last edged 0.26% lower to $0.6543.
In commodities, Brent crude futures ticked up 0.62% to $71.56 a barrel, while U.S. West Texas Intermediate crude futures rose 0.76% to $67.72 per barrel. [O/R]
(Reporting by Rae Wee; Editing by Jacqueline Wong)
Cryptocurrencies are digital or virtual currencies that use cryptography for security, making them difficult to counterfeit. They operate on decentralized networks based on blockchain technology.
Foreign exchange, or forex, refers to the global marketplace for trading national currencies against one another, facilitating international trade and investment.
Financial markets are platforms where buyers and sellers engage in the trade of assets such as stocks, bonds, currencies, and derivatives, influencing the economy.
An investment portfolio is a collection of financial assets such as stocks, bonds, and cash equivalents, managed to achieve specific financial goals.
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