(Bloomberg) — Stocks and Treasuries advanced, with traders accepting Donald Trump’s pick of Scott Bessent for Treasury secretary as a measured choice that would inject more stability into the U.S. economy and financial markets. .
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A gauge of Asian stocks rose about 1%, led by gains in Japan, South Korea and Australia. US futures also rose. Meanwhile, the 10-year Treasury yield fell five basis points to 4.35%. The dollar fell while Bitcoin recovered from a weekend drop.
Bessent, who runs macro hedge fund Key Square Group, has indicated he will back Trump’s tax and tariff cut plans, but investors expect him to prioritize economic and market stability over scoring political points. The nomination has eased concerns about the incoming president’s protectionist policies, which threatened to stoke inflation, worsen trade tensions and amplify market volatility.
Elements of the so-called Trump Trade featuring a rising dollar and rising Bitcoin are cooling, as traders reduce bets on high interest rates that may result from more expensive imports and lower taxes.
“We have Trump’s reflationary agenda and obviously maybe someone in charge of the economy at the Treasury is probably more gradualist,” Vincent Juvyns, global market strategist at JPMorgan Asset Management, told Bloomberg TV. “American exceptionalism will remain to some extent on the economic front, but also on the market front.”
The Bloomberg Dollar Index posted its biggest drop in more than two weeks, with the yen leading the gains. Traders betting on Trump’s fiscal policies, including sweeping trade tariffs and persistent economic growth, had lifted the dollar for eight straight weeks through Friday.
Back in Asia, stock benchmarks in India rose on Monday as the alliance led by Prime Minister Narendra Modi’s Bharatiya Janata Party secured a commanding victory in the country’s richest state, Maharashtra. Still, local stocks remain a long way from their highs for the year, as global funds have withdrawn more than $14 billion since October amid concerns about earnings growth, lofty valuations and recent U.S. accusations against the Adani Group.
“This is a short-term relief rally,” said Sonam Srivastava, founder of Wright Research. “We have to expect a substantial return of foreign capital.”
Chinese stocks bucked the region’s trend, reflecting continued investor disappointment over the lack of stronger fiscal measures to revive the world’s second-largest economy. Meanwhile, the country’s central bank kept the official lending rate unchanged after last cutting it in September.
Japan and US data
Oil fell after the biggest weekly gain in nearly two months as geopolitical risks in Ukraine and the Middle East kept investors nervous. Gold also fell after hitting its biggest jump in 20 months last week.
This week, traders in Asia will closely monitor inflation data from Japan after Bank of Japan Governor Kazuo Ueda indicated last week that the December monetary policy meeting is underway. The Reserve Bank of New Zealand is expected to cut its key interest rate on Wednesday.
Elsewhere, a series of inflation and growth readings will be published in Europe. Traders will closely analyze the Federal Reserve’s November meeting minutes, consumer confidence and personal consumption spending data to help assess the prospects for rate cuts next year.
