Asian Stocks Fall Ahead of US Presidential Debate: Markets Wrap

(Bloomberg) — Asian stocks opened lower on Wednesday as investors weighed election risks ahead of the first US presidential debate between Vice President Kamala Harris and former President Donald Trump.

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Equity benchmarks fell in Tokyo and were little changed in Seoul and Sydney. Futures for Hong Kong shares pointed to a lower open. Global growth concerns resurfaced as oil dropped below $70 Tuesday while Treasury yields declined in the run-up to the US consumer price index later Wednesday and the Federal Reserve policy meeting next week.

The match-up between Trump and Harris promises more clarity for traders, who’ve already spent months parsing campaign-trail language around tax proposals, tariff projections, government spending plans and policies on energy, electric vehicles, health care and more. The Treasury yield curve has steepened this year on concern that the US deficit will worsen, with Trump’s policies seen as potentially inflationary.

“The markets will be gripped by the US Presidential debate today,” said Kyle Rodda, a senior market analyst at Capital.Com Inc. “The race is neck and neck, heightening uncertainty about US fiscal, trade and foreign policy going forward.”

Traders in the US interest-rate options market are still betting on at least one super-sized Fed interest-rate cut this year — just probably not before the Nov. 5 US election. Forecasters expect a monthly report on consumer prices to show another month of muted increases, possibly playing into a Fed debate over how much to cut interest rates.

“Given the market’s aggressive expectations for Fed rate cuts, a hotter reading should lead to downside volatility,” said Sameer Samana at Wells Fargo Investment Institute. “A cooler print has more two-way risk as it creates more room for the Fed to cut, but may also indicate the economy is slowing faster than anticipated.”

In Asia, markets will be looking for cues on the future direction of US-China relations during the debate, with defense, biotechnology and banking companies in the region under the microscope. Market jitters are also expected to increase, with a three-month measure of implied volatility for a key Bloomberg dollar gauge near its highest mark since the March 2023 banking crisis.

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Crude has tumbled by almost a fifth so far this quarter on concerns that slowing growth in the US and China, the leading consumers, will crimp demand at a time of robust and expanding supplies. West Texas Intermediate crude rebounded in early trading after plummeting as much as 5% in its previous session. Copper and aluminum also fell after Chinese trade data offered evidence of weakening domestic demand for metals.

Back in the US, the S&P 500 rose 0.4% with a Bloomberg gauge of the “Magnificent Seven” megacaps jumping 1.5%. Tesla Inc. led gains in Wall Street megacaps on Tuesday and Oracle Corp. hit an all-time high. JPMorgan Chase & Co. sank more than 5% after tempering its earnings optimism and Bank of America Corp. said investment-banking results will come in lower than some expected.

Key events this week:

• US CPI, Wednesday

• Japan PPI, Thursday

• ECB rate decision, Thursday

• US initial jobless claims, PPI, Thursday

• Eurozone industrial production, Friday

• Japan industrial production, Friday

• U. Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 9:26 a.m. Tokyo time

• Hang Seng futures fell 0.7%

• Japan’s Topix fell 1.1%

• Australia’s S&P/ASX 200 was little changed

• Euro Stoxx 50 futures fell 0.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was unchanged at $1.1020

• The Japanese yen rose 0.3% to 142.05 per dollar

• The offshore yuan was little changed at 7.1363 per dollar

• The Australian dollar was little changed at $0.6648

Cryptocurrencies

• Bitcoin fell 0.1% to $57,498.81

• Ether was little changed at $2,378.42

Bonds

• The yield on 10-year Treasuries was little changed at 3.64%

• Japan’s 10-year yield declined three basis points to 0.860%

• Australia’s 10-year yield declined four basis points to 3.87%

Commodities

This story was produced with the assistance of Bloomberg Automation.

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