asian stocks: Asia sees cautious open; US stocks buoyed by Trump: Markets wrap

Stocks in Asia were muted in early Tuesday trading, following gains on Wall Street fueled by optimism surrounding a second Donald Trump term as the former US president chose his running mate.
Equity benchmarks rose in Japan and Korea, while those in Australia were steady. Futures for Hong Kong stocks pointed to a decline. US futures edged higher in early Tuesday trading after benchmarks there climbed and traders priced a greater chance of a Trump win after he survived an assassination attempt. Caution in Asia comes amid signs of emerging market volatility in anticipation that Trump’s tariff threats will be implemented. A gauge of such currencies snapped eight straight days of gains on Monday, with those in South Africa and Mexico — both seen as bellwethers of risk appetite — leading the losses. The dollar was little changed.

Within the regions, investors have been allocating based on which countries will be seen as friends or foes, given the Presidency will be more based on bilateral political and trade ties over multilateral policy, said Kyle Rodda, a senior analyst at Capital.com in Melbourne.

“His view of the world is fairly zero sum” with Japan seen on friendly terms and China in the “bad books,” he said in a phone interview. “There’s definately still that figurative pairs trade going on at the moment, which is long Japan and short China.”

In the US, the Dow Jones Industrial Average hit an all-time high as Trump named JD Vance as his running mate. Trump Media & Technology Group Corp. soared 31%. Conservative video-sharing platform Rumble Inc. jumped 21%. Trump’s rising odds of victory boosted oil producers, gun makers and private prisons. His pro-cryptocurrency stance lifted the industry. Tesla Inc. rallied as Elon Musk endorsed Trump. Solar firms sank as Democrats are seen as more friendly toward the sector.

Federal Reserve Chair Jerome Powell said in an interview that second-quarter economic data has provided policymakers greater confidence that inflation is heading down to the central bank’s 2% goal, possibly paving the way for near-term interest-rate cuts. He made clear he didn’t intend to send any specific message about the timing of rate reductions.

Meanwhile, the chances of Trump winning a second term rose in the aftermath of Saturday’s shooting, according to PredictIt data.

“We were shocked by the attempt on former President Trump’s life, but suspect that markets will digest the news quickly and with little fanfare,” said John Stoltzfus at Oppenheimer Asset Management. “Shocking events tend not to deter investors, who we expect will remain focused on economic and earnings results.”

To Mark McCormick at TD Securities, markets seem “less fussed about elections” and much keener to enjoy the slide in US data surprises, especially the latest consumer-price index reading.

“Everyone is passing around their favorite Trump trades — but I think we’ve seen over the past century that stock market moves are more random than what a president can dictate,” said Peter Boockvar at The Boock Report.