Asian markets drop as Biden drops out of White House race

3 months ago 67

Joe Biden gave his backing to Vice President Kamala Harris after announcing his decision to drop out of November's race for the White House

Asian markets fell Monday as Joe Biden's decision to drop out of the US presidential race fuelled fresh uncertainty, while traders appeared to be unmoved by China's decision to cut interest rates in a bid to boost the country's stuttering economy.

After last weekend's assassination attempt on Donald Trump -- and the following Republican convention -- boosted bets he would win November's election, investors were trying to work out the ramifications of the news out of the White House.

Biden on Sunday gave in to weeks of calls for him to step aside in the wake of a poor debate performance that raised more questions about his health, and endorsed Vice President Kamala Harris to succeed him.

The news has left traders wondering who will go head to head with Trump, whose expected victory had lifted equities and the dollar on expectations for tax cuts and deregulation.

Analysts said markets would likely be volatile in the near term.

"While market instinct will be to say that the news adds a degree of uncertainty to the outcome of the 5 November election that wasn't present last week, it will be many weeks... before anyone can reasonably determine if the race for the White House is significantly narrower than looked to be case previously," said National Australia Bank's Ray Attrill.

"In short, there'll be more noise than signal on US politics for markets to contend with in the coming few weeks at least."

Stocks in Asia fell Monday following losses on Wall Street and Europe, where trade was dominated by a crash in global computer systems -- the result of a faulty update to an antivirus program -- that hit airports, airlines, trains, banks, shops and even doctors' appointments.

Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei and Manila all fell, though Jakarta and Wellington edged up.

The latest developments out of Washington have overshadowed optimism that the Federal Reserve will cut interest rates as soon as September and possibly again before January.

There was little reaction to news that China's central bank had cut borrowing costs as leaders look to kickstart the world's number two economy, which has been hammered by a huge property crisis and weak consumer demand.

The Bank of China lowered the one-year and five-year loan prime rates in a bid to encourage commercial banks to grant more credit.

The decision comes after a closely watched meeting last week of leaders concluded with few major announcements bar pledges to tackle "risks" in the economy.

However, officials pledged Friday to help ease debt pressure on local governments through reforms to the tax system.

Worries about local government finances have been growing for years and have been made worse by the a chronic real estate debt crisis and in April ratings agency Fitch lowered its outlook on China's sovereign credit.