In Asia, most markets were mixed on Monday, with the turmoil in Chinese shares pulling them lower, even as bitcoin soared to a three-month high in a reflection of growing wagers that Donald Trump’s policies would be beneficial for the US economy. Gold prices jumped to fresh highs as a Middle East war and tight US presidential race left investors scrambling for safe havens, a sign of the uncertainty that should keep the store-of-value safe-haven demand well supported. Investors also remained unsure about the specifics of fiscal policies promised by the Chinese government recently via rate cuts and stimulus announcements.
Markets responded to those expectations too, with inflation-linked financial instruments climbing higher in anticipation of a US election outcome that appears to be increasingly likely to favour Democrat candidate Joe Biden. Trump has made it clear that much of his policy programme – involving tariffs, taxes and immigration – is geared towards supercharging the US economy, a move that would very likely be inflationary. That helped the dollar and Bitcoin, which was up marginally again, nudging a new session high of $69,487. The picture was similarly modest among traditional equities, with Japanese shares up by 0.8 per cent but wider Asian indices little changed. Commodities were bullish with oil and gold prices up. The precious metal rose to a new peak at $2,727.39 an ounce, in part because major buyers of gold and silver – who are hedging against dire scenarios in their home currency, usually the dollar – use gold as a diversifier and a hedge against bad times and economic crises.
All in all, the strange mix of rising geopolitical tensions with speculation around US and European elections as well as anticipating policy moves globally made for a nervous, but vigilant trading environment at least until the beginning of the last week of September, with Bitcoin and gold the big winners in the general market dynamics, and the prospect of more detailed fiscal support from China remaining a key variable for the markets.
Source: Reuters
