SINGAPORE- Bonds rallied on Wednesday as markets prepared for global interest rates to fall, while stocks in Taiwan slipped after US presidential candidate Donald Trump sounded lukewarm in his commitment to the island’s defense.
Sterling ticked higher after British inflation held at 2 percent year-on-year in June against forecasts for 1.9 percent , with services inflation stuck at an uncomfortable 5.7 percent .
FTSE futures rose 0.2 percent and S&P 500 futures traded 0.2 percent lower after the cash index made a record high on Wednesday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat and Japan’s Nikkei fell 0.4 percent .
In Taiwan, chipmaker TSMC fell 3 percent , wiping out close to $30 billion in market value, after Trump questioned US support in an interview with Bloomberg Businessweek, saying Taiwan should pay for US protection.
It was unclear exactly what Trump was planning, however his selection of trade hawk J.D. Vance as his running mate had already put markets on notice that China will figure heavily in his foreign policy thinking.
Chinese stocks were subdued for a second day running.
The Taiwan dollar slipped slightly to a two-week low. China’s yuan steadied at 7.2673 per dollar as markets waited on news from a leadership meeting in Beijing which ends on Thursday.
“It is more and more clear to me that Trump should be bullish for USD for at least a while,” said Brent Donnelly, president at analytics firm Spectra Markets, as he is expected to impose tariffs and run a higher budget deficit.
“It’s hard to imagine USDCNH ending 2024 below 7.25 on a Trump victory in November but it’s not hard to imagine it closing above 7.50,” he said, referring to the dollar-yuan pair.
Elsewhere in the technology sector ASML the largest equipment supplier to chipmakers, reported better-than-expected second-quarter earnings and shares were indicated as opening higher.
In Asia, New Zealand shares hit their highest since March 2022 after data showed inflation slowing, though the rates market dipped and the currency rose on sticky domestically driven inflation.