Chinese Bonds Rise as Central Bank Cuts Interest Rates
Chinese bonds saw an increase in value after the central bank reduced the main interest rate. The yield on China’s 10-year government bonds fell by nearly 2 basis points, following the People’s Bank of China’s decision to lower short-term interest rates.
Dollar Weakens as Biden Supports Harris
The dollar depreciated, while US Treasury bonds rose in value, after US President Joe Biden ended his re-election campaign and endorsed Vice President Kamala Harris, according to Bloomberg.
Global Markets React to Recent Economic News
Global markets saw a surge in interest rates for the first time in almost a year, boosting support for growth. Benchmark bond futures with the same term reached a record high.
Chinese stock indices declined, amplifying regional losses from Japan to Australia against the backdrop of weakness in the technology sector. Shares of chip manufacturer Taiwan Semiconductor Manufacturing fell by as much as 3.3%. Meanwhile, futures on US stocks rose.
The easing of Chinese monetary policy is seen as a “recognition that there is a huge upward economic trend”.
Market Analysis: Impact of Political Decisions on Global Economy
Recent political decisions have had a significant impact on the global economy, as noted by economists and analysts. This includes measures taken by policymakers to support economic growth and stability.
Effects on Currency and Investments
The Bloomberg index for the strength of the US dollar has decreased slightly, while the yield on 10-year government bonds has also seen a decline. In response, the Mexican peso has strengthened, the price of gold has risen, and Bitcoin has reached its highest value in over a month.
The Impact of Biden’s Debate Performance on the Markets
Analysts have been analyzing the increased likelihood of Donald Trump winning the November elections following Biden’s weak performance in the debates, with bets on Trump’s victory rising last week after the assassination attempt on the Republican candidate. The question for investors is whether to continue on the same course, now that Biden has dropped out of the race for reelection.
Asian Markets React to Uncertainty
Facing huge surprises for the second consecutive week, the Asian market will be closely monitored,” commented an analyst at IG Markets. “The increased reluctance to take risks may lead to fluctuations in the market as investors assess the changing political landscape in the US.”
Impact of Political Context on Asian Stocks
Asian stocks are expected to be more volatile this week as investors try to understand the unknown political context. The currency market is also expected to feel increased pressure.
Market Performance
Last Friday, the broad American stock index S&P 500 fell by 0.7%, ending its worst week since April. Technology stocks declined in anticipation of corporate earnings reports this week, with CrowdStrike Holdings Inc., the company behind a major IT crash that led to flight cancellations and disruptions in corporations worldwide, dropping by 15%.
Tesla Inc. and Alphabet Inc. Earnings Report
Tesla Inc. and Alphabet Inc. are set to be the first of the so-called “Fabulous Seven” to report their earnings on Tuesday. Analysts are likely to put pressure on Elon Musk’s electric vehicle giant regarding the progress of his plans for robotaxis. Investors will also focus on Google’s revenues from artificial intelligence.
