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Market Overview: Asia Shares and Global Sentiment

By Rae Wee

SINGAPORE (Reuters) – On Monday, Asia’s stock markets displayed a choppy performance, oscillating in and out of positive territory. This volatility was largely driven by the ongoing weakness in Chinese equity markets, which has raised concerns among investors. In stark contrast to this trend, Bitcoin found its footing, reaching a three-month peak as the so-called "Trump trades" continued to gain momentum.

Rising Gold Prices Amid Global Uncertainty

In the context of escalating conflicts in the Middle East and an exceptionally close U.S. presidential election, the price of gold ascended to another record high. Analysts predict that, amidst a backdrop of global uncertainty, the appeal of gold as a safe-haven asset is expected to persist. The market is closely monitoring developments in this area, as the situation evolves.

Cautious Optimism Surrounding Chinese Stimulus

Initially, optimism surrounded Beijing’s announcement of a range of stimulus measures at the end of September, but recent days have seen a shift toward caution. Investors are now eager for more comprehensive details regarding additional fiscal support from Chinese policymakers. Although China announced a cut to its benchmark lending rates on Monday, the move was anticipated and did little to shift market sentiment significantly.

In Hong Kong, equities were down 0.6% at the last check, while China’s blue-chip index exhibited volatility, swinging between losses and gains; it ultimately traded 0.4% higher. The Shanghai Composite Index also registered a modest gain of 0.36%. This volatility seemed to cap any potential advances within MSCI’s broadest index of Asia-Pacific shares outside Japan, which edged up only 0.11%. This small uptick suggested a pullback in sentiment following a robust performance by U.S. stocks, which recorded a sixth consecutive week of gains on Friday. Meanwhile, Japan’s Nikkei index managed to rise by 0.34%.

Awaiting Further Developments in Chinese Policy

Further insights regarding Chinese economic stimulus are expected to take time to materialize. "We might have to wait until late October or early November for concrete plans from the National People’s Congress’s Standing Committee meeting," stated Chaoping Zhu, a global market strategist at J.P. Morgan Asset Management in Shanghai. This anticipation adds another layer of complexity to the current market situation as traders and investors navigate their strategies.

U.S. Presidential Election Impact

As we approach the U.S. presidential election on November 5, speculation surrounding Donald Trump’s potential victory has gained traction in various financial instruments. The Republican candidate’s policies regarding tariffs, taxes, and immigration are considered inflationary, which typically poses disadvantages for bonds while benefiting the dollar. Additionally, Trump’s perceived positive stance towards cryptocurrencies has caught the attention of market players.

Market analyst Tony Sycamore noted that "Trump appears to be ahead in key battleground states, suggesting that he is well-positioned to potentially reclaim the White House." This sentiment has already begun to reflect in market behavior, with equities showcasing strength and yields climbing, in conjunction with a robust performance from the U.S. dollar and Bitcoin, which is on track for a notable increase of 10% over the past week.

Bitcoin’s Recent Performance

At the last measurement, Bitcoin rose by 0.5%, reaching $69,100—this follows a high of $69,487 earlier in the session, marking the cryptocurrency’s strongest level since July. Over the past week alone, Bitcoin has seen a significant surge of 9.6%, with an overall monthly increase of over 8%. Sycamore remarked, "Things look pretty good for Bitcoin right here. I think it can continue higher," underscoring the optimism surrounding the digital asset’s potential trajectory.

Dollar and Forex Market Trends

In foreign exchange markets, the U.S. dollar remained close to a two-month high against a basket of currencies, with the dollar index hovering at 103.46. Meanwhile, Sterling experienced a slight dip of 0.02% to $1.3045, and the euro fell marginally by 0.01% to $1.0865.

In the bond market, the benchmark 10-year U.S. Treasury yield increased by one basis point, settling at 4.0907%, while the two-year yield stood at 3.9568%.

Continued Rally in Gold Prices

Spot gold recently peaked at an all-time high of $2,727.39 per ounce, extending its rally following a notable gain of over 2% the previous week. Arun Sai, senior multi-asset strategist at Pictet Asset Management, pointed out, "One of the clearest ‘Trump trades’ so far has been gold, given his aggressive stance on trade and readiness to leverage the dollar—this keeps demand for diversification strong among emerging central banks."

Oil Market Updates

In the energy sector, oil prices experienced a slight uptick on Monday, attempting to recover from a significant downturn the previous week. Brent crude futures rose 0.4% to reach $73.36 per barrel, while U.S. crude prices climbed 0.43% to settle at $69.52 per barrel.

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Reporting by Rae Wee; Editing by Edwina Gibbs

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