US stock futures indicated gains as investors bet on a second Donald Trump presidency and awaited US retail sales data expected to influence the Federal Reserve’s rate cut decision. S&P 500 contracts rose 0.1% as traders factored in a higher likelihood of Trump’s re-election after he survived an assassination attempt. Sentiment was also buoyed by Fed Chair Jerome Powell’s comments suggesting that inflation is moving towards the central bank’s 2% target.
European futures traded lower ahead of the European Central Bank’s rate decision on Thursday. The dollar strengthened against most major currencies, with the yen declining against the greenback on expectations of continued weakness during Trump’s potential second term. US 10-year bond yields edged lower in anticipation of the retail sales report.
“Current expectations are pointing to a more subdued state for US consumers, with June retail sales expected to be flat month-on-month, down from a previous 0.1% increase,” wrote Jun Rong Yeap, a market strategist at IG Asia Pte. “This could reinforce market expectations for a September rate cut from the Fed.”
Global Market Reaction
The MSCI AC Asia Pacific index fell 0.3%, marking its third consecutive day of losses. Stocks in Hong Kong saw the largest declines in the region, while some Chinese stocks also traded lower amid concerns over Trump’s re-election and its implications for trade and geopolitical tensions. In contrast, Japanese stocks rose, benefiting from the yen’s decline which favored exporters.
Kyle Rodda, a senior analyst at Capital.com in Melbourne, noted that investors are allocating assets based on perceived international relations under Trump. “His view of the world is fairly zero-sum, with Japan seen on friendly terms and China in the ‘bad books,'” he said. “There’s a figurative pairs trade going on at the moment, which is long Japan and short China.”
Market Moves and Sector Impact
The Dow Jones Industrial Average reached an all-time high after Trump named JD Vance as his running mate. Shares of Trump Media & Technology Group Corp. surged by 31%. Trump’s rising election odds also boosted sectors like oil production, firearms, and private prisons, while his pro-cryptocurrency stance lifted the crypto industry. Conversely, solar firms saw declines, as Democrats are generally viewed as more favorable towards renewable energy.
Vance, 39, nearly four decades younger than Trump, 78, brings a fresh perspective aimed at appealing to working-class voters, particularly in battleground states like Michigan, Wisconsin, and Pennsylvania. “The decision is crucial as one-third of US presidents have previously been vice presidents,” said Tom McLoughlin at UBS Global Wealth Management. “Trump’s choice effectively anoints Vance as his successor in delivering a populist message to a younger generation.”
Economic Outlook and Corporate News
Fed Chair Jerome Powell expressed increased confidence that inflation is trending towards the central bank’s 2% goal, suggesting possible near-term interest-rate cuts. However, he clarified that he wasn’t signaling any specific timing for these reductions.
In Asia, US exchange-traded funds (ETFs) tracking Chinese equities experienced outflows for the sixth consecutive week due to weak economic data and concerns over Trump’s potential re-election. Last week saw net outflows of $229.4 million from these ETFs.
New research from UBS Group AG highlighted the economic risks for China if Trump returns to the White House, predicting that new tariffs of 60% on all Chinese exports to the US could more than halve China’s annual growth rate. Senator Vance of Ohio, Trump’s vice-presidential pick, emphasized that China is the biggest threat to the US.
In corporate news, shares of Energy Absolute Pcl in Thailand fell by as much as 30% after the company’s founder and CEO resigned amid a fraud investigation, leading to a downgrade of its credit rating to junk status.
Commodities
In commodities, oil prices edged lower for a third day due to concerns over weak Chinese demand and the impact of a stronger dollar. Meanwhile, gold prices rose for a second consecutive day.
