Asian Markets Mixed as U.S. Election and China’s Fiscal Policies Weigh on Sentiment

Most Asian markets faced declines on Tuesday, with traders cautious ahead of the U.S. presidential election and the Federal Reserve’s expected rate cut later in the week. The uncertain race between Donald Trump and Kamala Harris has heightened risk aversion, keeping investors on the sidelines.

Chinese Markets Supported by Positive Economic Data

Chinese markets bucked the regional trend, with the Shanghai Shenzhen CSI 300 and Shanghai Composite both rising by 0.8%, and Hong Kong’s Hang Seng index up 0.3%. Positive sentiment was spurred by better-than-expected PMI data showing robust growth in China’s services sector, coupled with hopes for further fiscal stimulus from the ongoing National People’s Congress (NPC) meeting.

China’s Standing Committee of the NPC began its four-day session on Monday, expected to yield further fiscal measures to bolster economic growth, particularly amid global uncertainties.

Australian Market Dips Amid RBA Meeting

Australia’s ASX 200 dropped by 0.5% as traders awaited the Reserve Bank of Australia (RBA) meeting. While the RBA is expected to keep rates unchanged, investors anticipate a hawkish stance, with recent inflation and labor market data remaining strong. The central bank is not expected to initiate rate cuts until early 2025, according to analysts at ANZ and Westpac.

Broader Asian Markets Show Mixed Performance

Japan’s Nikkei 225 and TOPIX indexes both rebounded, up 1.3% and 0.9%, respectively, after a holiday weekend. In contrast, South Korea’s KOSPI declined by 0.6% as weaker-than-expected inflation data suggested the possibility of further rate cuts, but losses in the tech sector weighed on the market.

Indian markets also showed signs of cooling, with futures for the Nifty 50 index pointing to a flat opening following Monday’s 1% losses on the BSE Sensex 30 and Nifty 50. Indian stocks have been hit by significant foreign capital outflows, stemming from tempered optimism around the country’s economic outlook.

Looking Ahead

With the U.S. election, China’s NPC meeting, and central bank decisions around the globe, this week could set the tone for markets as traders respond to developments in fiscal policy, economic data, and central bank moves across major economies.