Asian markets were mixed on Monday as investors weighed the impact of the assassination attempt on Donald Trump on data suggesting it boosted his chances of re-election as president.
All eyes are also on a key meeting of China’s top leadership in Beijing, with hopes for measures to boost the world’s number two economy, which grew less than expected in the second quarter.
Investors struggled to extend the rally enjoyed by Wall Street, with all three major indices closing higher despite forecasts for US wholesale prices.
The data was not enough to overshadow Thursday’s news that the consumer price index had slowed more than expected in June, raising bets on a Federal Reserve rate cut in September.
That came after central bank chief Jerome Powell told lawmakers that inflation does not need to reach policymakers’ two percent target for them to start cutting borrowing costs.
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But investors are closely watching developments in the United States after Trump was hit with a bullet on Saturday at a rally ahead of this week’s Republican convention.
While his odds of beating President Joe Biden had grown in recent weeks, they got an extra boost from the shooting.
Observers said a Trump victory could lead to lower corporate taxes – a boost to corporate earnings – but also an increase in tensions with China with possible new tariffs.
But Katrina Ell at Moody’s Analytics said: βThe assassination attempt may lead to a temporary boost in the polls for Trump, but a lot can change before November.
“Financial markets are expected to soon refocus on the US Federal Reserve and the growing likelihood of a rate cut in September.”
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The dollar rose on Monday, having weakened last week on the prospect of lower interest rates, while equity markets were mixed.
Hong Kong, Shanghai, Seoul, Taipei and Jakarta fell, while Sydney, Singapore, Manila and Wellington moved up.
Official data showed the Chinese economy grew just 4.7 percent in the second quarter, well below the 5.1 percent forecast in a Bloomberg survey.
Separate data showed retail sales slowed sharply in June as the country’s army of consumers remained cautious.
The readings underscore the tough job facing leaders as they deal with a housing debt crisis, weakening consumption, an aging population and trade tensions with their Western rivals.
President Xi Jinping and other top leaders are gathering in Beijing to draw up plans to kick-start growth, although analysts have warned that any major announcement is unlikely in the near term.
“A Trump victory would be damaging to China’s economy, given that manufacturing and exports are fueling the recovery,” added Moody’s Ell.
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“Trump has indicated that under his leadership some significant trade barriers will be imposed on China.”
Keys around 02:30 GMT
Hong Kong – Hang Seng Index: DOWN 0.9 percent at 18,123.67
Shanghai Composite: DOWN 0.2 percent at 2,965.55
Tokyo – Nikkei 225: Closed due to holiday
Dollar/yen: UP to 158.04 yen from 157.88 yen on Friday
EUR/USD: DOWN to $1.0889 from $1.0906
GBP/USD: DOWN to $1.2966 from $1.2989
Euro/pound: DOWN to 83.95 pence from 83.97 pence
West Texas Intermediate: DOWN 0.5% to $81.80 a barrel
Brent North Sea crude: DOWN 0.5% at $84.64 a barrel
New York – Dow: UP 0.6 percent at 40,000.90 (close)
London – FTSE 100: UP 0.4 per cent at 8,252.91 (close)
Source: AFP