Asian shares steadied on Thursday as investors eagerly awaited a crucial housing policy briefing in China, expected to provide much-needed support for the struggling property sector. Meanwhile, the dollar remained near 2.5-month highs, buoyed by the prospect of a Donald Trump presidency, which has led to increased optimism around the Trump trade.
The Impact of Trump’s Policies on the Dollar
Demand for the U.S. dollar has increased with the prospect of a Trump victory. Damien McColough, head of rates strategy at Westpac, noted, “It’s probably only in the last two or three days that the concept of a Trump victory is getting the U.S. dollar bid.” Many view his policies on tariffs and taxes as inflationary. This perception tends to favor the dollar and hurt bonds.
Asian Markets and Key Economic Indicators
Japan’s Nikkei index rose 0.2% in early trade. Australian shares climbed 1% to a record high, driven by strong banking performance. The Chinese markets also showed positive movement, with the Shanghai Composite up 0.5% and Hong Kong’s Hang Seng increasing by 2%.
Global economic data set for release later this week, including U.S. retail sales and China’s third-quarter GDP, is likely to influence market dynamics further.
Global Economic Conditions and Market Reactions
Global bonds have rallied after a significant drop in British inflation. This has raised expectations for potential rate cuts from the European Central Bank. The Bank of England is also facing pressure to reduce rates. Markets are pricing in a nearly 90% chance of two cuts before the year’s end.
In the foreign exchange market, the Australian dollar rebounded from a one-month low, while sterling slipped to its lowest point since August 20 amid these economic pressures.
Commodity Markets and Investor Sentiment
In commodity trading, Bitcoin has surged by 15% over the past week, reaching $67,615, while gold prices hovered around $2,677 per ounce. Brent crude futures stabilized at $74.57 per barrel after experiencing four sessions of losses, driven by unexpected drops in U.S. crude stockpiles.
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