Asian shares experienced a mixed day on Monday, fluctuating between gains and losses, largely influenced by a downturn in Chinese stocks. However, amidst this volatility, Bitcoin surged to a three-month high, driven by rising interest in “Trump trades.”
Gold also shone brightly, reaching record levels due to ongoing tensions in the Middle East and the approaching U.S. presidential election, as investors flock to safe havens amid global uncertainty.
After an initial wave of optimism surrounding China’s recent stimulus measures, investor sentiment has turned cautious. Although China announced a cut to its benchmark lending rates today, this move was widely expected and failed to spark significant enthusiasm among traders.
In Hong Kong, shares dipped by 0.6%, while China’s blue-chip index saw a see-saw effect, finishing 0.4% higher. The Shanghai Composite Index also managed a modest gain of 0.36%. Meanwhile, the broader MSCI Asia-Pacific index (excluding Japan) edged up by a slight 0.11%, a downturn in sentiment following six consecutive weeks of gains in U.S. stocks. Japan’s Nikkei, however, showed some resilience, rising by 0.34%.
Market experts believe more details regarding China’s fiscal support may take time to emerge. “We may have to wait until late October or early November for concrete plans from the National People’s Congress,” noted Chaoping Zhu, a global market strategist at J.P. Morgan Asset Management in Shanghai.
U.S. Election Impact
With just two weeks until the U.S. election on November 5, expectations of a potential Donald Trump victory are affecting market dynamics. Financial instruments reflecting Trump’s tariff, tax, and immigration policies are becoming more attractive as they are seen as inflationary—boosting the dollar while putting pressure on bonds. His favorable stance toward cryptocurrencies has also caught the attention of investors.
“Trump appears to be gaining ground in key battleground states, which suggests he may be well positioned to reclaim the White House. Markets began factoring this in last week, leading to stronger equities and a rising dollar,” explained Tony Sycamore, a market analyst at IG. Bitcoin was last seen up 0.5% at $69,100, after peaking at $69,487 earlier in the session, marking a 9.6% rise over the past week.
“The outlook for Bitcoin looks strong right now. I anticipate it will continue to climb,” Sycamore added.
The dollar remained strong, near a two-month high against other currencies, with the dollar index sitting at 103.46. Meanwhile, the British pound dipped slightly to $1.3045, and the euro fell marginally to $1.0865.
In the bond market, the benchmark 10-year U.S. Treasury yield inched up to 4.0907%, while the two-year yield was at 3.9568%.
Spot gold hit a record high of $2,727.39 per ounce, bolstered by its appeal as a safe-haven asset during turbulent times. “Gold has been one of the clearest beneficiaries of the so-called Trump trade, as central banks seek diversification amid trade tensions,” noted Arun Sai, a senior strategist at Pictet Asset Management.
In energy markets, oil prices saw a slight rebound from last week’s steep decline, with Brent crude futures up 0.4% at $73.36 a barrel and U.S. crude rising 0.43% to $69.52 per barrel.
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