Asian equity markets experienced a downturn as worries about China’s economic prospects lingered, while the yen managed to recover slightly, breaking a three-day losing streak. The MSCI Asia Pacific Index was on track for a fourth consecutive day of declines, with stock prices in both China and South Korea falling. Japanese Finance Minister Katsunobu Kato expressed concerns over the “one-sided, rapid” movements in the currency market, following a more than 1% decline of the yen against the dollar on Wednesday.
In the U.S., benchmark 10-year Treasury yields decreased by two basis points, partially reversing the previous day’s rise that had seen yields reach their highest levels in nearly three months. Oil prices rebounded after a retreat on Wednesday, as traders navigated tensions in the Middle East and assessed market conditions leading into 2025.
Investor anxiety over China’s economic outlook remains pronounced, with market participants questioning whether the government’s recent stimulus efforts will sufficiently spur growth. The approaching U.S. presidential election and the Federal Reserve’s interest rate policies are also crucial considerations, as swap traders show uncertainty about potential rate cuts in the remaining meetings of the year.
“There remains uncertainty over whether the stimulus will lead to fundamental changes,” said Vanessa Xu, chief investment officer at VS Partners, during an interview with Bloomberg TV. The significant price fluctuations in Chinese stocks over recent weeks represent “a tug of war between speculative and serious investments,” she added.
In the United States, the presidential race between Donald Trump and Kamala Harris is exceptionally close, with recent polls indicating a statistical tie among likely voters in seven crucial swing states, according to Bloomberg News/Morning Consult.
“The cost of options to hedge against Treasury losses is skyrocketing,” noted Andrew Brenner from NatAlliance Securities. “In the U.S., the focus is on the election and the potential for a sweep, which is influencing the rate structure and allowing market vigilantes to act. This trend may reverse, but it could take a significant employment report or an election surprise to trigger it.”
In other news, Taiwan Semiconductor Manufacturing Co. suspended shipments to a client after it was revealed that chips produced for that client had reached Huawei Technology Co., potentially breaching U.S. sanctions. Conversely, shares of SK Hynix Inc. in South Korea rose after the company reported record quarterly profits and revenue.
According to Julia Wang, executive director and global market strategist at JPMorgan Private Bank, a recent pullback in U.S. and Asia-based technology and artificial intelligence firms has created an appealing entry point for investors. “The movement in Treasury yields and the persistent strength of the dollar have dampened investor risk appetite. However, we maintain a medium-term outlook and believe this presents a compelling buy-the-dip opportunity,” Wang stated on Bloomberg Television.
U.S. big tech stocks saw gains in late trading, buoyed by Tesla’s strong performance as it launched the “Magnificent Seven” earnings season with results that exceeded analyst expectations. The automaker’s shares rose by 8% after reporting adjusted earnings above forecasts, while also projecting slight growth in vehicle deliveries for the year.
“Earnings season is heating up,” remarked David Laut at Abound Financial. “We see continued upside potential for stocks, particularly as we enter a seasonally robust period for the markets.”
In commodities, gold prices edged higher after experiencing their most significant daily decline in 11 weeks.
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