Global Markets Tumble as Trump’s Policy Agenda Sparks Concern
As the world waits with bated breath for President-elect Donald Trump to unveil his cabinet, Asian shares have taken a nosedive, mirroring the decline in European and US equity futures. The MSCI Asia Pacific Index has slipped for the third consecutive day, with Treasury yields on the rise amidst fears that Trump’s tax cuts will stoke inflation.
Hong Kong Leads Losses in Asia
Reports that Trump is poised to appoint two China critics to key positions in his administration have sent Hong Kong shares plummeting. Senator Marco Rubio, a vocal critic of China’s economic power, is tipped to become Secretary of State, while Representative Mike Waltz, who views China as a major threat to the US, is in line to become National Security Advisor. This has sparked concerns that Trump will follow through on his campaign pledge to impose punitive tariffs on Chinese exports to the US.
Dollar Strengthens, Oil Drops
The Bloomberg Dollar Spot Index has gained 0.2%, reaching a one-year high, while oil prices have dropped following their biggest decline in two weeks. Treasury 10-year yields have climbed as much as three basis points to 4.34%, weighing on Asian shares.
China’s Housing Market in Focus
A report suggesting that Chinese authorities plan to cut taxes for home purchases to revive the moribund housing market has provided some support to China’s benchmark CSI 300 Index. However, analysts remain skeptical, citing low demand and lack of confidence in the Chinese economy.
Earnings Season Kicks Off
This week, investors will be closely watching earnings reports from Tencent Holdings Ltd. and Alibaba Group Holding Ltd., which will provide insight into how these companies have fared amidst Beijing’s stimulus efforts.
US Inflation Figures in Focus
The core consumer price index, due out on Wednesday, is expected to show a steady pace of growth, which could influence the Federal Reserve’s decision on interest rates.
Global Events to Watch
This week, key events include Germany’s CPI and ZEW survey, Fed speakers, Eurozone industrial production, US PPI and jobless claims, and China’s retail sales and industrial production figures.
Markets in Brief
- Stocks: S&P 500 futures fell 0.1%, Hong Kong’s Hang Seng fell 3%, and the Shanghai Composite fell 1.5%.
- Currencies: The euro fell 0.2% to $1.0633, while the offshore yuan fell 0.3% to 7.2513 per dollar.
- Bonds: The yield on 10-year Treasuries advanced three basis points to 4.33%.
- Commodities: West Texas Intermediate crude fell 0.2% to $67.93 a barrel, while spot gold fell 0.4% to $2,607.19 an ounce.
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