Asian equities and US stock futures declined on Wednesday, while the dollar weakened, following a contentious US presidential debate between Vice President Kamala Harris and former President Donald Trump, Reuters reports.
Investors were left uncertain ahead of key US inflation data, which could influence the Federal Reserve’s next policy decisions.
During the debate, Harris and Trump clashed over major topics such as abortion, the economy, immigration, and Trump’s legal challenges. Market sentiment was impacted as traders weighed the potential economic policies of the two candidates, although the debate offered few specific policy details. Betting markets shifted slightly in Harris’ favor, bolstered by pop star Taylor Swift’s endorsement of the Vice President in the upcoming election.
Asian markets were broadly weaker following the debate. The MSCI’s broad index of Asia-Pacific shares outside Japan dropped by 0.3%, Japan’s Nikkei fell nearly 2%, and Hong Kong’s Hang Seng Index declined 1.4%. In the US, S&P 500 futures slipped 0.5%, and European stock futures also pointed to a softer open.
The US dollar lost ground, with the dollar index dropping 0.3% to 101.34. Meanwhile, the Japanese yen strengthened over 1% to an eight-month high, as investors leaned towards Harris as the debate’s winner. The yield on the US 10-year Treasury note eased slightly to 3.62%.
Markets are now turning their attention to the US Labor Department’s Consumer Price Index (CPI) report, expected later on Wednesday. This data will be crucial for assessing the Federal Reserve’s next moves, especially as inflation remains a key issue. A Reuters poll indicated that the headline CPI is expected to show a 0.2% month-on-month increase for August, in line with the previous month.
While many analysts expect the Fed to cut interest rates next week, the extent of the cut remains uncertain. Following a mixed labor report last Friday, which left questions about the health of the job market, investors are divided between the likelihood of a 25 basis point rate cut or a larger 50 basis point reduction.
In the commodities market, oil prices found some stability after falling over 3% in the previous session. Brent crude futures edged 0.43% higher to $69.49 per barrel, while US West Texas Intermediate (WTI) crude rose 0.46% to $66.03 per barrel. This recovery followed OPEC+ revising down its demand forecast for the remainder of the year and for 2025, leading to uncertainty in the energy market.
