SINGAPORE — Stocks in Japan were set to trade lower at the open as U.S. President Donald Trump called off stimulus negotiations till after the November election.
Futures pointed to a lower open for stocks in Japan. The Nikkei futures contract in Chicago was at 23,285 while its counterpart in Osaka was at 23,260. That compared against the Nikkei 225’s last close at 23,433.73.
Meanwhile, stocks in Australia dipped in early trade, with the S&P/ASX 200 down around 0.1%.
Trump’s ‘big gamble’
Investor reaction to Trump’s move to halt stimulus talks will be watched.
The U.S. president tweeted Tuesday: “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,”
“President Trump’s decision to halt negotiations until after the elections is a big gamble,” Rodrigo Catril, a currency strategist at National Australia Bank, wrote in a note.
“History tells us that the state of the economy is a big factor that can determine election outcomes, going into an election with a weakening economy more often than not means Presidents don’t get re-elected,” Catril said. “Of course there is a blaming game going on here and whether Trump can convince the electorate that this is not his fault, but the Democrats, it remains to be seen.”
Trump’s latest move came as U.S. Federal Reserve Chairman Jerome Powell on Tuesday called for continued aggressive fiscal and monetary stimulus for an economic recovery he said still “has a long way to go.”
Stocks on Wall Street fell overnight following Trump’s announcement. The Dow Jones Industrial Average closed 375.88 points lower, or 1.3%, at 27,772.76. The S&P 500 ended its trading day 1.4% lower at 3,360.95 while the Nasdaq Composite dropped 1.6% to close at 11,154.60.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.686 after an rise from levels below 93.6.
The Japanese yen traded at 105.62 per dollar, off levels around 105 against the greenback seen last week. The Australian dollar changed hands at $0.7102 after seeing levels above $0.715 yesterday.