Amidst a highly anticipated and competitive U.S. presidential campaign, the majority of Asian stocks saw a decline on Wednesday. Meanwhile, trade worries caused Chinese markets to drop to their lowest point in seven months.
Regional markets followed the declines in U.S. stock index futures after the heated debate between former President Donald Trump and Vice President Kamala Harris. With fewer than two months until the election, the discussion raised further questions about the 2024 presidential contest.
Tuesday saw modest increases for Wall Street indices as technology sectors recovered from their recent losses. However, during the preceding week, international markets and US stocks suffered severe losses.
The focus is also on the U.S. inflation report that is anticipated later in the day, which will probably affect projections for interest rates in the country in the months to come.
The advancement of a U.S. law intended to limit trade with Chinese biotechnology businesses has negatively impacted sentiment toward China. On Monday, the law was virtually overwhelmingly approved by the House of Representatives.
The law, which still has to be approved by the Senate, was criticised by Beijing. However, the law adds to the already tense U.S.-China ties brought on by the recent imposition of additional, high trade tariffs on certain Chinese sectors.
The news that Trump will be reaffirming his plans to levy more trade duties against China also soured sentiment against the nation.
Nikkei 225 and TOPIX indices in Japan fell more than 1.6% apiece as a result of the Bank of Japan's continued hawkish comments.
BOJ member Junko Nakagawa stated that interest rate hikes by the central bank will persist, particularly if inflation follows its projections. Her remarks were made only one week before the BOJ meeting, and investors are apprehensive about yet another rate increase.
Asian markets were severely impacted during August due to a 15 basis point raise by the BOJ at its meeting in late July, as well as hawkish remarks made by officials. Additionally, the unwinding of the yen carry trade put pressure on global risk-driven markets.
Before a U.S. consumer price index inflation figure that is likely to have an impact on the forecast for interest rates later on Wednesday, markets were tense. It is anticipated that August's inflation rate will decrease somewhat.
A week before the Federal Reserve meeting, which is anticipated to see an interest rate reduction of at least 25 basis points, the CPI data is released.
Stock markets were shaken last week by dwindling hopes for a 50 basis point decrease, despite some encouraging evidence of the US economy's resiliency.
(Sources: investing.com, reuters.com)
