Asian stocks showed a mixed performance on Tuesday, following gains on Wall Street and a surge in U.S. bond yields, driven by election-related factors influencing global markets.
U.S. futures declined while oil prices climbed. The Japanese yen hit a near 38-year low, reaching 161.67 yen to the dollar early in the day.
Japan’s Nikkei 225 Sees Gains
Tokyo’s benchmark Nikkei 225 index advanced by 1.1%, reaching 40,074.69. The depreciation of the yen encouraged buying in export-oriented shares, boosting the overall market performance.
Australia and South Korea Exhibit Losses
In contrast, Australia’s S&P/ASX 200 index dropped by 0.4% to 7,718.20. South Korea’s Kospi also fell, shedding 0.8% to close at 2,781.92.
Despite a report from Statistics Korea indicating that consumer inflation in the country slowed to an 11-month low in June, the market did not react positively.
Hong Kong and China Show Modest Gains
Hong Kong’s market rebounded after a holiday on Monday, with the Hang Seng index rising 0.3% to 17,775.84.
Similarly, the Shanghai Composite index inched up by 0.1% to 2,995.78, reflecting cautious optimism.
Mixed Performances Across Other Asian Markets
Elsewhere in Asia, Taiwan’s Taiex index increased by 0.6%, while Thailand’s SET index slipped by 0.4%.
The varying performances across these markets highlight the region’s mixed reactions to global economic and political developments.
Wall Street’s Impact on Global Markets
On Monday, Wall Street experienced modest gains, with the S&P 500 rising by 0.3% to 5,475.09.
The Dow Jones Industrial Average edged up by 0.1% to 39,169.52, and the Nasdaq composite gained 0.8% to 17,879.30.
These positive movements in the U.S. market had a ripple effect on global markets, including those in Asia.
European Markets React Strongly
Across the Atlantic, the CAC 40 index in Paris saw significant action, jumping by as much as 2.8% before settling with a 1.1% gain.
This surge was attributed to election results in France, suggesting that a far-right political party might not secure a decisive majority in the legislative elections.
U.S. Election-Related Market Movements
The U.S. market movements were also influenced by political developments.
Trump Media & Technology Group, linked to former President Trump’s White House prospects, saw its stock climb by 1% to $33.08.
Despite this rise, shares remain significantly lower than their earlier high of approximately $70.
Treasury Yields Surge
Treasury yields spiked, continuing the trend observed on Friday following the Biden-Trump debate.
The increased likelihood of a Republican victory in the upcoming elections drove traders to revisit strategies from 2016, resulting in higher rates and a shift towards energy and financial stocks.
The yield on the 10-year Treasury note rose to 4.46% from 4.39% late Friday and 4.29% late Thursday, reversing the downward trend since spring when it peaked at 4.70% in late April.
Economic Highlights of the Week
The week’s major economic focus will be on the U.S. employment report scheduled for release on Friday.
The report is expected to reveal the number of jobs added in June, with economists forecasting a slowdown in hiring to 190,000, down from May’s 272,000.
This figure is anticipated to align more closely with Bank of America’s “Goldilocks” number of approximately 150,000, plus or minus 25,000.
Oil Prices Edge Higher
In other market activities, benchmark U.S. crude oil rose by 15 cents to $83.53 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international benchmark, increased by 23 cents to $86.83 per barrel, reflecting stable demand and supply dynamics.
Conclusion
The mixed performance of Asian markets on Tuesday underscores the complex interplay of global economic and political factors.
As investors navigate these uncertainties, the influence of Wall Street gains, fluctuating treasury yields, and political developments will continue to shape market trends.
The upcoming U.S. employment report will be a crucial indicator for future market movements, providing further insights into the health of the economy and potential implications for global markets.