(Bloomberg) — Asian stocks fell to the lowest level in nearly two months on concerns that U.S. President-elect Donald Trump’s proposed tariffs and elections for key administration posts could stoke inflation. .
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Stock benchmarks in Japan and Australia retreated as a regional gauge fell to the weakest level since Sept. 18. The Bloomberg Dollar Spot Index was steady ahead of a report on US consumer price inflation, while the yen approached the key level of 155 per dollar. .
10-year Treasury yields were little changed after rising 12 basis points on Tuesday. Traders are now pricing in around two US rate cuts through June, down from nearly four seen early last week. US stock futures fell.
Sentiment toward Asian stocks has taken a cautious turn since Trump’s election, as traders expect his planned policies to further boost inflation and slow the pace of interest rate cuts. The president-elect’s picks for key government posts are also fueling jitters, as he fills his Cabinet with people willing to carry out his “America First” policies on the border, trade, national security and the economy.
“While attention remains focused on Trump 2.0, there has been a slight tilt toward tariff fears that are outweighing expectations for tax cuts given announcements that China hawks will be elevated to key positions in Trump’s cabinets,” said Charu Chanana, chief investment strategist at Saxo. Markets.
Meanwhile, China signaled its displeasure over the yuan’s weakness through its daily reference rate for the currency amid the threat of higher US tariffs under the Trump administration. The fixing was 445 pips stronger than the average estimate in a Bloomberg survey.
Beijing began trading dollar bonds in Saudi Arabia, marking the country’s first debt sale in US currency since 2021.
Traders are betting on further losses in Treasuries in anticipation that Trump’s planned policies will revive inflation and keep U.S. interest rates high. Open interest, an indication of futures traders’ positioning in the bond market, rose for the fourth straight session in the two-year note contract, data released Tuesday showed.
On the economic front, US data due on Wednesday may reinforce concerns about an acceleration in inflation, with analysts predicting that the headline consumer price index likely rose 0.2% for the fourth month.
Minneapolis Federal Reserve President Neel Kashkari said Tuesday he will watch inflation data closely to determine whether another interest rate cut is appropriate at the U.S. central bank’s December meeting.
Bitcoin fell after a spectacular rally took the digital asset to nearly $90,000 for the first time. Meanwhile, Trump said Elon Musk and Vivek Ramaswamy will lead the Department of Government Efficiency.
In corporate news, Seven & i Holdings Co. is said to be considering a management buyout to go private with financing from banks, Itochu Corp. and the founding Ito family in a transaction that could be worth 9 trillion yen ( 58 billion dollars).
In the commodities market, oil stabilized and approached its lowest level this month, focusing on demand prospects after OPEC again reduced its projections on China’s slowdown. Gold rose.
This week’s key events:
Eurozone industrial production, Wednesday
US CPI, Wednesday
Fed speakers include Jeffrey Schmid, Lorie Logan, Neel Kashkari and Alberto Musalem, on Wednesday.
Eurozone GDP, Thursday
US PPI, jobless claims, Thursday
Walt Disney Earnings, Thursday
Fed speakers include Jerome Powell, John Williams and Adriana Kugler on Thursday
China retail sales and industrial production, Friday
US Retail Sales, Empire Manufacturing, Industrial Production, Friday
Some of the main movements in the markets:
Stocks
S&P 500 futures fell 0.2% at 1:48 p.m. Tokyo time
Nikkei 225 (OSE) futures fell 1.3%
Japanese Topix fell 1%
Australia’s S&P/ASX 200 fell 0.8%
Hong Kong’s Hang Seng fell 0.6%
The Shanghai Composite hardly changed
Euro Stoxx 50 futures fell 0.2%
Coins
Bloomberg Dollar Spot Index Little Changed
The euro was little changed at $1.0618
The Japanese yen fell 0.2% to 154.89 per dollar
The offshore yuan rose 0.1% to 7.2341 per dollar
The Australian dollar was little changed at $0.6536.
Cryptocurrencies
Bitcoin fell 2% to $86,577.49
Ether fell 3.3% to $3,171.3.
Captivity
The yield on the 10-year Treasury bond barely changed, standing at 4.43%.
The 10-year Japanese bond yield rose 3.5 basis points to 1.040%
Australia’s 10-year yield rose 10 basis points to 4.66%
Raw materials
West Texas Intermediate crude rose 0.2% to $68.28 a barrel
Spot gold rose 0.4% to $2,609.01 an ounce.
This story was produced with the help of Bloomberg Automation.
