Pedestrians reflected in an electronic board displaying a graph of the exchange rate of the yen against the U.S. dollar outside a securities firm in Tokyo, Japan, on Thursday, May 2, 2024. (Photo: Toru Hanai/Bloomberg) Shares in Japan rose, while those in South Korea fluctuated. Hong Kong and mainland China shares were down amid signs of emerging market volatility in anticipation that Trump’s tariffs will be implemented.
US futures edged higher in early Tuesday trading after benchmarks there climbed, and traders priced a greater chance of a Trump win after he survived an assassination attempt. The dollar was higher against most of its Group-of-10 peers.
Investors have been allocating based on which countries will be seen as friends or foes by Trump, said Kyle Rodda, a senior analyst at Capital.com in Melbourne. “His view of the world is fairly zero sum” with Japan seen on friendly terms and China in the “bad books,” he said in an interview. “There’s definitely still that figurative pairs trade going on at the moment, which is long Japan and short China.”
Outflows across US exchange-traded funds tracking Chinese equities persisted for a sixth-straight week, as weaker economic data and implications of a Trump victory spooked investors — even before Saturday’s assassination attempt. The world’s second largest economy recorded net outflows of $229.4-million from this group of ETFs last week.
Investors’ concerns over China’s economy grew after Monday’s data showing its GDP growth unexpectedly slowed to the worst pace in five quarters. Faltering consumer spending undermined an export boom, putting pressure on policymakers to step up support at a twice-a-decade economic meeting this week. Goldman Sachs cut its 2024 full-year GDP forecast for China, saying second-quarter GDP growth came in well below market expectations.
Back in the US, the Dow Jones Industrial Average hit an all-time high as Trump named JD Vance as his running mate. Trump Media & Technology Group Corp. soared 31%. Trump’s rising odds of victory also boosted oil producers, gun makers and private prisons. His pro-cryptocurrency stance lifted the industry. Solar firms sank as Democrats are seen as more friendly toward the sector.
Vance is 39, nearly four decades younger than Trump, 78, offering a fresh voice to Republican efforts to bolster their appeal to the working-class workers who were once a bedrock of the Democratic party in battlegrounds such as Michigan, Wisconsin and Pennsylvania.
“The decision is crucial because one-third of US presidents throughout American history have previously occupied the position of vice president,” said Tom McLoughlin at UBS Global Wealth Management. “Moreover, in this instance, Trump’s decision effectively anoints Vance as his successor in terms of delivering a populist message to a younger generation of voters.”
US 30-year yields were above the two-year one for the first time since January as traders priced the prospect of a more expansive fiscal policy under Trump. Australian bonds climbed in early trading.
Federal Reserve chair Jerome Powell said in an interview that second-quarter economic data has provided policymakers greater confidence that inflation is heading down to the central bank’s 2% goal, possibly paving the way for near-term interest-rate cuts. He made clear he didn’t intend to send any specific message about the timing of rate reductions.
In commodities, oil steadied after a two-day decline in quiet summer trading, with the outlook for the US dollar and monetary policy in focus. Gold rose for a second day.