However the November U.S. election plays out there are risks for Chinese companies. Vice President Kamala Harris has emerged as the Democratic presidential candidate after President Joe Biden, 81, ended his re-election bid on Sunday.
It is not clear how what kind of China policy she will favor but she and rival Republican Donald Trump are expected to take tough stands on tariffs and Taiwan, as Biden has.
The Democratic National Committee’s rules committee agreed on Wednesday on a plan to formally nominate Harris as soon as Aug. 1 — before the party’s Aug. 19-22 convention in Chicago — with Harris picking a running mate by Aug. 7
The S&P 500 and Nasdaq skidded to multi-week lows on Wednesday after Tesla <TSLA.O> and Alphabet <GOOGL.O> disappointed with lackluster earnings and their shares tumbling 12% and 5%, respectively.
The tech-heavy Nasdaq <.IXIC> ended 3.6% lower and the S&P 500 <.SPX> fell 2.3%. Other megacaps, Apple (AAPL.O), Microsoft (MSFT.O), Amazon.com (AMZN.O), Meta Platforms (META.O) and Nvidia (NVDA.O), took it on the chin, as did small caps <.RUT>, which enjoyed a brief moment in the sun in recent weeks.
The dollar fell to its lowest in more than two months against the yen as short-yen carry trades were unwound ahead of next week’s Bank of Japan meeting. That coincides with the July 30-31 FOMC meeting. While the Fed is unlikely to pull the trigger on easing this month, a scenario in which yield differentials soon narrow from both sides is being built in.
