Global Markets Surge as Investors Bet on Trump’s Economic Agenda
As the dust settles on the US presidential election, investors are positioning themselves for a second Donald Trump presidency, driving Asian stocks and European and US equity futures higher. The rally is fueled by expectations of a Federal Reserve interest-rate cut and a Trump policy agenda that favors lower taxes and less regulation, supporting corporate profits.
China’s Stimulus Hopes Boost Asian Markets
Chinese stocks led the charge in Asia, surging over 2% on optimism that Beijing will roll out more stimulus measures to boost its economy. Encouraging export data also lifted investor sentiment. “Hopes are rising that China may unveil a substantial fiscal package in the coming days, providing a shot in the arm for its languishing economy,” said Frederic Neumann, a chief Asia economist at HSBC Holdings Plc in Hong Kong.
Fed Rate Cut Expectations Boost Treasury Yields
Treasury 10-year yields surged 16 basis points on Wednesday as investors priced in the likelihood of a Fed rate cut. The yield slipped one basis point to 4.43% in Asian trade. The Fed is forecast to trim its key rate by a quarter point on Thursday, following a half-point cut in September.
Dollar Strengthens, Yen Recovers
The dollar index ticked lower in Asia after jumping about 1.3% on Wednesday. The yen strengthened after Japan’s chief currency official Atsushi Mimura said the authorities would take appropriate action against excessive currency moves. The currency had tumbled about 2% on Wednesday as the dollar surged after Trump’s victory.
Investors Eye China’s Policy Toolkit
China’s regulators have told the nation’s banks to lower the rates they pay for demand deposits from other financial institutions, freeing up idle funds to boost the economy. Spreads on Asian investment-grade dollar bonds tightened to a record low, with yield premiums on the notes declining by at least one basis point. All eyes are on what may emerge from China’s policy toolkit after the conclusion of the NPC standing committee meeting on November 8th.
Market Snapshot
Stocks: S&P 500 futures rose 0.2%, Euro Stoxx 50 futures rose 0.4%, Hong Kong’s Hang Seng rose 1.5%, Shanghai Composite rose 2.3%
Currencies: Bloomberg Dollar Spot Index fell 0.2%, euro rose 0.2% to $1.0747, Japanese yen rose 0.4% to 154.05 per dollar, offshore yuan rose 0.2% to 7.1898 per dollar
Bonds: Yield on 10-year Treasuries was little changed at 4.43%, Japan’s 10-year yield advanced 2.5 basis points to 1.005%
Commodities: West Texas Intermediate crude rose 0.2% to $71.86 a barrel, spot gold fell 0.1% to $2,655.93 an ounce
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