Equity markets yesterday were mixed as investors weighed the effects of the assassination attempt on former US president Donald Trump with data suggesting it has boosted his chances of being re-elected president.
Eyes are also on a key meeting of China’s top leadership in Beijing, with hopes for measures to boost the world’s No. 2 economy, which grew less than expected in the second quarter.
Investors struggled to extend the rally enjoyed on Wall Street last week, where all three main indices ended on a positive note, despite a forecast-topping read on US wholesale prices.
Photo: AFP
The figures were not enough to overshadow Thursday’s news that the US consumer price index had slowed more than expected last month, which ramped up bets on a US Federal Reserve interest rate cut in September.
However, investors are keeping a close eye on developments in the US after Trump was on Saturday wounded at a rally ahead of the Republican National Convention this week.
While the odds of him beating US President Joe Biden had been rising in the past few weeks, they got an extra lift from the shooting.
Observers said a Trump victory could lead to lower corporate taxes — a boost for companies’ bottom lines — but also an increase in tensions with China with fresh tariffs possible.
“The assassination attempt might lead to a temporary boost in the polls for Trump, but a lot can change before November,” Moody’s Analytics economist Katrina Ell said. “Financial markets are expected to soon refocus on the Federal Reserve and the growing likelihood of a rate cut in September.”
Equity markets were mixed yesterday, with the TAIEX closing down 37.57 points, or 0.16 percent, at 23,879.36 in Taipei.
Shares in Hong Kong, Wellington, Bangkok and Jakarta also dropped, along with those in London, Paris and Frankfurt, while in Shanghai, Seoul, Mumbai, Sydney, Singapore and Manila, shares rose.
The US dollar yesterday rose, having softened last week owing to the prospect of lower rates. A potential return of Trump as the next US president might bring bad news for emerging-market currencies, given the threat of his protectionist economic policies.
The won led the broader declines in Asia and the New Taiwan dollar also edged lower. Indonesia’s rupiah and Thailand’s baht snapped eight days of gains, while Malaysia’s ringgit slipped from its highest level in January. Meanwhile, Mexico’s peso fell 0.8 percent and the South African rand was down 0.6 percent.
Official data showed the Chinese economy expanded just 4.7 percent year-on-year in the second quarter, well below the 5.1 percent forecast in a survey by Bloomberg and short of the government’s 5 percent goal.
Separately, retail sales slowed sharply last month as the country’s army of consumers remained cautious.
The “data releases showed that the road to 5 percent growth remains difficult, and more fiscal and monetary policy support will be needed in the second half of the year if this year’s key growth target is to be achieved,” ING Bank NV chief economist for Greater China Lynn Song (宋林) said.
Additional reporting by Bloomberg
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