As Traders Prepare for Trump’s US Agenda, Stocks Decline – Asia Market Wrap

Asian markets sank to a two-month low on concerns that US President-elect Donald Trump’s proposed tariffs and nominations for key cabinet positions would drive up inflation.

Equity benchmarks in Japan, Hong Kong, and Australia fell as a regional measure reached its lowest level since September 13. The Dollar index crept higher ahead of a report on US consumer price inflation, but the Yen remained close to the important barrier of 155 per Dollar.

Treasury 10-year rates were barely changed after rising by 12 bps on Tuesday. Traders now expect approximately two US rate cuts in June, compared to nearly four at the start of the week. US and European stock futures fell.

Since Trump’s win, sentiment towards Asian equities has turned cautious, as traders expect his proposed plans to push up inflation and halt the pace of interest-rate cuts. The president-elect’s nominees for key federal positions are also raising concerns, as he fills his Cabinet with people who will carry out his ‘America First’ policies on the border, trade, national security, and the economy.

Meanwhile, China expressed concern about the yuan’s weakness through its daily reference rate, citing the potential of greater US tariffs under a Trump administration. Beijing has begun marketing Dollar bonds in Saudi Arabia, marking the country’s first debt sale in the US currency since 2021.