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. It also flirted with a record peak as markets weigh the prospect of a victory by Republican candidate Donald Trump.
Impact of U.S. Election on Asia Shares
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 lost 1%. Hong Kong’s slid 1.82%.
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.
Additional Insight: Foreign Investment Concerns
“Foreign investors are still highly concerned about potential tariff threats if next week’s U.S. elections result in a Republican sweep,” indicating that the outcome of the U.S. election could have significant implications for foreign investment in China.
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%.
Global Market Outlook
Elsewhere, EUROSTOXX 50 futures fell 0.42% and 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.
Insights on Bitcoin and U.S. Data
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.
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.
Insights on Currency Markets
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 was little changed in the wake of domestic inflation data and last edged 0.26% lower to $0.6543. In commodities, 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.
