Asia Shares Dip Amidst Chinese Stock Weakness, Bitcoin Hits Three-Month Peak
In the ever-changing landscape of the financial markets, Asia shares experienced fluctuations on Monday, influenced by the weakening Chinese stocks. Despite this, bitcoin reached a three-month peak as “Trump trades” continued to gain momentum.
Gold also reached another record high due to escalating conflict in the Middle East and the extremely close U.S. presidential election. With global uncertainty looming, the yellow metal is expected to remain a preferred asset among investors.
Initially, there was optimism surrounding Beijing’s stimulus measures announced in late September. However, as days passed, caution set in as investors awaited further details on fiscal support from policymakers.
Although China reduced its benchmark lending rates on Monday, this move was widely anticipated. Equities in Hong Kong were down by 0.6%, while China’s blue-chip index fluctuated between losses and gains, ultimately gaining 0.4%. The Shanghai Composite Index also saw an increase of 0.36%. These developments impacted MSCI’s broadest index of Asia-Pacific shares outside Japan, which experienced a marginal 0.11% increase. In contrast, Japan’s Nikkei rose by 0.34%.
As investors eagerly await details on Chinese stimulus, Chaoping Zhu, global market strategist at J.P. Morgan Asset Management in Shanghai, noted that concrete plans may not emerge until late October or early November.
On the political front, with just two weeks left before the U.S. election on Nov. 5, there is a growing inclination towards a potential Donald Trump victory in some financial instruments. The inflationary implications of the Republican candidate’s tariff, tax, and immigration policies are perceived as negative for bonds but positive for the dollar. Additionally, Trump’s favorable stance towards cryptocurrencies has also influenced market sentiment.
Bitcoin, in particular, experienced a 0.5% increase, reaching $69,100 and hitting its highest level since July. Market analyst Tony Sycamore from IG noted a potential 10% gain for bitcoin over the past week, signaling positive momentum. The world’s largest cryptocurrency has already seen a 9.6% increase last week and is up more than 8% for the month so far.
With the dollar not far from a two-month high against a basket of currencies, the dollar index stood at 103.46. Meanwhile, spot gold peaked at a record of $2,727.39 per ounce, continuing its upward trajectory.
Arun Sai, senior multi-asset strategist at Pictet Asset Management, highlighted gold as one of the clearest “Trump trades” due to the President’s stance on trade and willingness to wield the dollar as a weapon, prompting demand for diversification among emerging central banks.
In the oil market, prices ticked higher on Monday after experiencing a steep decline last week. Brent crude futures increased by 0.4% to $73.36 per barrel, while U.S. crude ticked up 0.43% to $69.52 per barrel.
As the financial markets continue to react to geopolitical events and economic policies, staying informed and making strategic investment decisions is crucial for investors navigating these turbulent times. Stay tuned for more insights and analysis from Extreme Investor Network as we track the latest developments in finance and investments.