Market Reacts to Harris vs. Trump Presidential Debate

U.S. stock futures dipped, and the dollar weakened following the initial presidential debate between Kamala Harris and Donald Trump. Key issues included abortion, the economy, and immigration, impacting market sentiment. Bond yields declined, with Treasury and Euro zone yields hitting lows. Inflation data awaited for Federal Reserve decision.

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. Topics covered included abortion, the economy, immigration, and Trump's legal troubles, making investors anxious ahead of upcoming U.S. inflation data critical for Federal Reserve policy decisions next week.

Bond yields moved inversely to prices, with U.S. Treasury and Euro zone government bond yields dipping. Harris's strong debate performance lowered interest rate expectations, while higher spending and elevated rates are anticipated if Trump wins. Ten-year Treasury yields dropped to a session low of 3.609%, while Germany's 10-year yield fell to 2.12%, a one-month low.

S&P 500 futures eased by 0.36%, and MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3%. European shares slightly advanced, fueled by gains in the oil and gas sectors amid concerns that Hurricane Francine would disrupt U.S. output. Investors are now focusing on fiscal policies from both candidates. Harris gained additional backing from pop star Taylor Swift. The dollar index declined 0.3%, while the yen hit its highest level since December, supported by the Bank of Japan's commitment to raise interest rates if economic and inflation forecasts are met.