LONDON, Sept 11 (Askume) – U.S. stock futures fell, the dollar remained on the defensive and bond prices rose as markets reacted to the U.S. presidential debate in which Vice President Kamala Harris defeated Republican Donald Trump .
Presidential candidates discussed abortion, the economy, immigration and Trump’s legal issues in the first debate , raising investors’ concerns about U.S. inflation data that could influence the Federal Reserve’s policy moves next week.
Bond yields have moved inversely to prices as Democrat Harris’s strong performance has raised expectations of lower interest rates, while investors have anticipated spending would increase if Trump wins, leading to higher interest rates.
The 10-year government bond yield fell to 3.6068%, the lowest since June 2023. The euro zone’s benchmark German 10-year government bond yield fell 2.5 basis points (bps) to 2.12%, a one-month low.
Harris isPresident Joe Biden’s late entry into the presidential race after dropping out in July has made the race even more tense, and his strong debate performance has reversed the trend that favored Trump’s second term as president।
S&P 500 futures fell 0.3% as investors were unlikely to see Harris spend government money or cut taxes.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) also fell 0.3%.
European shares rose, with the pan-European STOXX 600 index (.STOXX) gaining 0.4% as the oil and gas industry got a boost from concerns that Hurricane Francine would disrupt US output.
The presidential debate shed little light on fiscal policy, though betting markets tilted in Harris’s favor after the event.
Pop singer Taylor Swift promoted Harris’ campaign, saying she would support Harris in the November 5 election.
“As the dust settles on the Trump-Harris presidential debate, the market has clearly seen the debate tilt in Kamala Harris’ favor,” said Chris Weston, research director at Pepperstone.
“This debate has never been about trying to dig deeply and understand the nuances of the policies involved, and we are certainly not wise in that regard.”
The US dollar index, which measures the greenback against its six peers, fell 0.256% to 101.38.
“You would expect that if he (Trump) performed better, you would see the dollar strengthen. So I think that’s the way the market is looking at it. It’s leaning slightly towards Harris,” said Rob Carnell, regional research director for Asia Pacific at ING.
Driven by comments by Bank of Japan board member Junko Nakakawa , the yen rose more than 1% against the dollar to $140.71, its highest level since December.
In his speech, Nakagawa reiterated that if the economy and inflation meet his forecasts, the central bank will continue to raise interest rates.
Shares of U.S. cryptocurrency and blockchain-related companies fell in pre-market trading, led by a 2% drop in bitcoin.
In July, Trump described himself as a pro-cryptocurrency candidate at the Bitcoin 2024 conference in Nashville.
Keep an eye on inflation
Investors are currently looking to the US Labor Department’s Consumer Price Index report, released on Wednesday, for policy cues, although the Federal Reserve has made it clear it is more focused on employment than inflation.
A Askume survey shows core CPI is expected to have risen 0.2% on a quarterly basis in August, the same as the previous month.
While the Fed is widely expected to cut interest rates next week, the extent of the reduction remains controversial, especially after Friday’s mixed labor report on the direction the central bank is headed.
“We need to see clear evidence of a slowdown/slowdown, particularly in the labor market, for more action from the Fed, but I think we had a clearer picture in the last jobs report,” ING’s Carnell said in a .
According to the CME FedWatch tool, the market currently estimates a 65% probability that the Federal Reserve will cut interest rates by 25 basis points, and a 35% probability of a 50 basis point interest rate cut when the Fed announces its decision on September 18.
In commodities, oil prices rose 2% after falling more than 3% in the previous session, as a drop in US crude stockpiles and disruption to US production from Hurricane Francine eased concerns about weak global demand.
Brent crude futures rose 2% to $70.64 a barrel, while US West Texas Intermediate (WTI) crude oil rose 2.25% to $67.21 a barrel.
