Markets React to Combative U.S. Presidential Debate

U.S. stock futures dipped while the dollar weakened following a contentious U.S. presidential debate where Vice President Kamala Harris challenged Donald Trump. Bond yields declined amid expectations of rate cuts if Harris wins. Investors await inflation data for clues on Federal Reserve's next moves.

U.S. stock futures faltered and the dollar was on the defensive on Wednesday as markets reacted to a U.S. presidential debate where Vice President Kamala Harris put Republican Donald Trump on the defensive. The debate, which covered topics such as abortion, the economy, and Trump's legal issues, left investors uneasy ahead of upcoming U.S. inflation data that could influence Federal Reserve policy.

U.S. Treasury and Euro zone bond yields dipped due to expectations of rate cuts if Harris wins, contrasting with anticipated higher spending and rates under Trump. Ten-year Treasury yields fell to 3.609%, the lowest since June 2023, while Germany's 10-year yield decreased to 2.12%.

Meanwhile, S&P 500 futures eased 0.36%, and MSCI's Asia-Pacific index dropped 0.3%. European shares rose, driven by the oil and gas sectors amid Hurricane Francine concerns. Betting markets swung in Harris's favor post-debate, with Taylor Swift endorsing her campaign. Investor focus now shifts to the U.S. Labor Department's consumer price index report for clues on Fed policy.

(With inputs from agencies.)