Asian shares experienced fluctuations on Monday, dipping in and out of positive territory under the pressure of declining Hong Kong stocks. Meanwhile, Bitcoin reached a three-month peak as market enthusiasm for “Trump trades” surged.
Gold prices soared to a record high, driven by global uncertainties stemming from ongoing conflicts in the Middle East and an extremely close U.S. presidential election, enhancing gold’s appeal as a safe haven asset.
Initial optimism over Beijing’s recent stimulus measures, announced in late September, has given way to caution as investors await further details on fiscal support from Chinese policymakers. Although China cut its benchmark lending rates on Monday, this move had been widely anticipated.
China’s blue-chip index oscillated between losses and gains in early trading but ultimately turned higher in the Asian afternoon, buoyed by a rise in technology stocks. The benchmark index was up 0.4%, while the Shanghai Composite Index gained 0.31%. The Beijing Stock Exchange 50 Index surged 14% to a record high after the exchange announced plans to assist small- and medium-sized tech firms with training and financing for listing.
In contrast, Hong Kong markets struggled, with stocks declining over 1%. As a result, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.26%, marking a setback after U.S. stocks posted gains for six consecutive weeks. Japan’s Nikkei index rose slightly by 0.12%.
Further details on Chinese stimulus measures are expected to take time. Chaoping Zhu, a global market strategist at J.P. Morgan Asset Management in Shanghai, noted, “We might have to wait until late October or early November for concrete plans from the Standing Committee meeting of the National People’s Congress.”
U.S. Election Dynamics Affect Markets
As the Nov. 5 U.S. election approaches, market sentiment is shifting in favor of a potential Donald Trump victory. His proposed tariff, tax, and immigration policies are perceived as inflationary, negatively impacting bonds while benefiting the dollar. Additionally, Trump is expected to adopt a more favorable stance towards cryptocurrencies.
Tony Sycamore, a market analyst at IG, commented, “It seems now that Trump’s ahead in the key battleground states, which suggests he’s quite well placed to regain the White House, and I think the markets started to factor that in last week with the stronger equities, higher yields, and the U.S. dollar doing very well.”
Bitcoin climbed 0.5% to $69,080.72, after reaching $69,487 earlier in the session, marking its strongest level since July. The cryptocurrency has gained 9.6% over the past week and is up more than 8% for the month so far. Sycamore remarked, “Things look pretty good for Bitcoin right here. I think it can continue higher.”
The U.S. dollar index hovered near a two-month high at 103.49. The British pound dipped 0.05% to $1.3041, and the euro fell 0.06% to $1.0861.
In the bond market, the benchmark 10-year U.S. Treasury yield was last recorded at 4.0809%, while the two-year yield remained steady at 3.9531%.
Gold prices surged to a record $2,732.73 per ounce, continuing their upward trajectory after a more than 2% increase last week. Arun Sai, a senior multi-asset strategist at Pictet Asset Management, noted, “One of the clearest Trump trades so far has been gold, given his belligerent stance on trade and willingness to weaponize the dollar, keeping demand for diversification well supported among emerging central banks.”
Oil prices also rose on Monday, recovering slightly from last week’s sharp declines. Brent crude futures increased by 0.6% to $73.49 a barrel, while U.S. crude rose 0.7% to $69.70 per barrel.
