Trump's Taiwan talk rattles chip stocks, gold shines as rate cuts beckon
Send a link to a friend
[July 17, 2024] By
Tom Westbrook and Naomi Rovnick
SINGAPORE, LONDON (Reuters) -Gold hit a record and bonds rallied on
Wednesday, while chip stocks tumbled after U.S. presidential candidate
Donald Trump sounded lukewarm about his commitment to defending Taiwan.
Sterling ticked higher after British inflation held at 2% year-on-year
in June against forecasts for 1.9%, with services inflation stuck at an
uncomfortable 5.7%.
Europe's Stoxx share index futures traded 0.2% lower. S&P 500 futures
were also 0.5% lower after the cash index hit a record high in the
previous session.
In Taiwan, TSMC fell 3%, wiping out close to $30 billion from the market
value of the world's largest chipmaker and a key player in the global
supply chain.
The slide came after Trump questioned U.S. support for Taiwan in an
interview with Bloomberg Businessweek, saying the closely monitored
island that sits roughly 100 miles from the mainland Chinese coast
should pay for U.S. protection.
ASML, the largest equipment supplier to chipmakers, reported
better-than-expected profit in the second quarter, but its shares
dropped as much as 7.7%.
It was unclear exactly what Trump was planning, but 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.
![](http://archives.lincolndailynews.com/2017/Jul/22/images/ads/current/rohlfs_lda_072017.png)
Chinese stocks were subdued for a second straight day.
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.
[to top of second column] |
![](../images/071724PIX/busine71.jpg)
Ingots of 99.99 percent pure gold are placed in a workroom at
Krastsvetmet precious metals plant in the Siberian city of
Krasnoyarsk, Russia, January 31, 2023. REUTERS/Alexander Manzyuk/File
Photo
![](http://archives.lincolndailynews.com/2024/Jul/17/images/ads/current/graue_lda_Buick4176_070824.jpg)
GOLD GLITTERS
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. [.AX][NZD/]
Treasuries held gains that had pushed 10-year U.S. yields to
four-month lows overnight after Federal Reserve Chair Jerome Powell
said recent cooling in inflation "adds somewhat to confidence" that
consumer prices are coming under control.
Fed funds futures have fully priced a U.S. rate cut for September,
followed by two more before the end of January 2025.
Ten-year yields were steady at 4.167% and two-year yields hovered at
4.45%, while German Bund yields fell 1 bp to 4.423%.
Lower yields helped propel gold sharply higher and through chart
resistance around $2,450 per ounce despite a broadly firm dollar. It
touched a record $2,482 overnight. [GOL/]
"Gold's ability to find support in any condition this year is worth
highlighting," said Commonwealth Bank of Australia commodity
strategist Vivek Dhar.
"While gold prices face uncertainty in coming months, the
uncertainty has a positive skew, raising the risk that gold rises
above our forecast of $2,500/oz by the end of the year."
The Japanese yen strengthened as trading began in Europe on
Wednesday, pushing the dollar down 0.75% to 157.08, well off early
July's 38-year high of 161.96, after a few rounds of likely
intervention from Tokyo authorities late last week.
The euro was steady at $1.0905.
Oil prices slipped slightly, weighed by signs of weakening demand
from China.
Brent crude futures rose 0.4% to $84.04 barrel and U.S. crude
futures gained 0.5% to trade at $81.12. [O/R]
(Editing by Sam Holmes, Kim Coghill and Arun Koyyur)
[© 2024 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |