Global Markets on High Alert as Trump’s Economic Agenda Takes Center Stage
As the new week begins, investors are bracing themselves for a tumultuous ride in Asian markets. The spotlight is on U.S. President Donald Trump’s economic agenda, which has been making headlines and sparking uncertainty. Meanwhile, the dollar’s recent 1.8% decline, its worst performance since November 2023, has raised eyebrows.
Dollar’s Downward Trend: A Sign of Things to Come?
The greenback’s consolidation shouldn’t come as a surprise, given its two-year high earlier this month and the massive hedge fund net ‘long’ position. However, if the dollar’s slide is an indication of the “U.S. exceptionalism” narrative losing steam, it could have far-reaching implications for Wall Street.
Wall Street’s AI and Tech Boom: Is the Bubble About to Burst?
The S&P 500 and Nasdaq have been riding high, with index levels at historic highs and valuations stretched to the limit. But with big event risk looming, including the Fed’s policy meeting and ‘Big Tech’ earnings, investors are getting nervous. The recent launch of a free, open-source AI model by Chinese startup DeepSeek has raised questions about the huge sums being spent on AI by U.S. tech firms, which could lead to a market correction.
Asia’s Economic Pulse: China’s PMI Reports Take Center Stage
On Monday, all eyes will be on China’s ‘official’ manufacturing and service sector purchasing managers index reports for January. A Reuters poll suggests the manufacturing PMI will remain unchanged from the previous month at 50.1, indicating a fourth straight month of expansion, but almost no growth at all for the second month in a row.
Japan’s Rate Hike: A Hawkish Move or Just a Blip?
Friday’s Bank of Japan rate hike has left investors scratching their heads. While the initial reaction was that it was a ‘hawkish hike’, Japanese money markets are still pricing in only another 25 basis points of tightening this year, unchanged from pre-Friday levels. This suggests the BOJ guidance was actually pretty neutral, and Japanese stock futures are pointing to a strong rise on Monday.
South Korea’s Political Turmoil: A Market-Moving Event
South Korean markets will be closely watching the news that prosecutors have indicted impeached President Yoon Suk Yeol on charges of leading an insurrection. This development could have significant implications for the country’s economy and markets.
Key Developments to Watch
Investors will be keeping a close eye on several key developments that could provide more direction to markets, including:
- China ‘official’ PMIs (January)
- Japan leading indicator (November)
- Germany Ifo index (January)
Leave a Reply