Investing.com-- Most Asian stocks fell on Monday amid uncertainty over what a potential administration change in the U.S. will entail for the region, with a surprise interest rate cut in China doing little to lift spirits.
Regional markets were digesting an abrupt decision by U.S. President Joe Biden to drop his reelection bid, endorsing Vice President Kamala Harris in his stead. Harris is now likely to run against Republican nominee Donald Trump.
While Wall Street futures initially rose after Biden’s decision, they trimmed a bulk of their gains in Asian trade.
An extended rout in technology stocks also pressured Asian markets, as a mix of profit-taking and a rotation into more economically-sensitive sectors sparked steep losses in tech.
Chinese stocks sink as Trump uncertainty offsets rate cut
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.7% each on Monday, taking little support from an unexpected cut to benchmark borrowing costs in the country.
The People’s Bank of China unexpectedly cut its one-year and five-year loan prime rates, bringing the rates further into record-low territory as it sought to support growth.
But the move did little to improve sentiment towards Chinese markets, which were nursing steep losses in recent weeks amid increased speculation that Trump will win a second term.
Trump, who was polling ahead of Biden and Harris according to CBS data from last week, has maintained a largely negative stance towards China. His administration had imposed steep tariffs on China, sparking a trade war with Beijing in the late-2010s.
A second term for Trump could entail a similar scenario, which bodes poorly for the world’s second-largest economy.
Concerns over China weighed on other regional markets. Australia’s ASX 200 slid 0.8%, given that the country has close trade ties with Beijing.
Tech rout, political uncertainty rattles Asian markets
Broader Asian markets retreated on Monday, extending steep losses from last week as a mix of political uncertainty and selling in technology stocks pressured regional markets.
Japan’s Nikkei 225 slid 1.1%, while the broader TOPIX lost 0.9%. South Korea’s KOSPI slid 1.2% on steep losses in major chipmaking stocks.
Taiwan’s Taiwan Weighted index plummeted 3%, extending recent losses amid uncertainty over how a new U.S. administration will treat the island and its relationship with China. Top chipmaker TSMC (TW:2330) (NYSE:TSM) fell 3%, extending losses despite clocking strong second-quarter earnings.
Futures for India’s Nifty 50 index pointed to a weak open, as Indian stocks were battered by a wave of profit-taking in recent sessions.
Hong Kong’s Hang Seng index was the sole outlier in Asia, rising 0.4% on some bargain buying into heavyweight technology stocks. The index had slumped to a near three-month low earlier in the session.