Chinese markets are trading cautiously on Wednesday, while the dollar has significantly strengthened against a basket of currencies as it becomes increasingly likely that Republican presidential candidate Donald Trump will return to the White House after four years. The Asian MSCI index was down 0.3 percent at 7:00 AM.
Meanwhile, the Nikkei index on the Tokyo Stock Exchange jumped more than 2 percent, while stock prices in Shanghai and Australia rose between 0.4 and 0.8 percent. In South Korea and Hong Kong, however, they fell between 0.9 and 1.9 percent.
In Hong Kong, stock prices sharply declined, while trading on Chinese markets remains cautious as election results from various U.S. states arrive, making it increasingly likely that Donald Trump, rather than Democratic candidate Kamala Harris, will win the presidential election.
This has raised concerns in China, given that Trump imposed tariffs on imports of Chinese goods during his previous presidential term, and in his current campaign, he has announced the introduction of tariffs of 60 percent or more on Chinese products.
– The chances of Trump’s victory have increased, so Chinese investors fear further escalation of tensions regarding trade relations and competition in the technology sector – says Steven Leung, director at UOB Kay Hian.
Wall Street and European markets on the rise
And while Chinese markets are under pressure, Wall Street seems to favor Trump’s victory. Already yesterday, Dow Jones, S&P 500, and Nasdaq rose more than one percent, and this morning, futures indices are up more than 1 percent, so further strong growth in stock prices is expected today on the world’s largest stock exchange.
As with U.S. futures indices, stock prices on European exchanges also significantly increased on Wednesday morning. The STOXX 600 index of leading European stocks was up 1.1 percent at 9:30 AM. Meanwhile, the London FTSE index strengthened by 1.03 percent to 8,257 points, while the Frankfurt DAX rose by 1.13 percent to 19,475 points, and the Paris CAC increased by 1.50 percent to 7,518 points.
Dollar significantly strengthens, oil prices fall
On the currency markets, the value of the dollar against a basket of currencies has significantly increased. The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 104.85 points this morning, while it was 103.90 points at the same time yesterday. Meanwhile, the exchange rate of the dollar against the Japanese currency rose from yesterday’s 152.35 to 154.05 yen.
The U.S. currency has also strengthened against the euro, causing the price of the euro to slide to 1.0760 dollars, down from 1.0875 dollars at the same time yesterday.
– Although the incoming election results are not unexpected, we see on the markets that yields on U.S. bonds are slightly rising, and the dollar and bitcoin are strengthening – classic ‘Trump trading’ – says Brian Jacobsen, economist at Annex Wealth Management.
Oil prices, on the other hand, have fallen. The price of a barrel on the London market slid 1.52 percent to 74.40 dollars, while on the U.S. market, a barrel decreased by 1.46 percent to 70.95 dollars.
