Equity markets across Asia experienced a downturn as investors reacted to the implications of Donald Trump’s recent electoral victory and its potential impact on U.S. economic policy. On November 8, stock indices in Japan and Hong Kong fell, with a regional gauge of Asian shares reaching its lowest point since September 13. U.S. stock futures also declined, reflecting the global apprehension surrounding Trump’s anticipated agenda.
The Japanese yen weakened significantly, surpassing the 155 per dollar mark for the first time since July, raising speculation that the Bank of Japan might intervene in the currency market to stabilize its value. The Bloomberg Dollar Spot Index saw a slight increase, while Treasury yields remained steady ahead of an important report on U.S. consumerprice inflation. Traders are now forecasting approximately two rate cuts by the Federal Reserve through June 2025, a significant shift from earlier expectations of nearly four cuts.
Investor sentiment towards Asian equities has turned cautious following Trump’s election, with concerns that his proposed policies could exacerbate inflation and delay interestrate reductions. The presidentelect’s appointments of key government officials, who are expected to implement his “America First” policies focused on trade and national security, have further fueled market jitters. Charu Chanana, chief investment strategist at Saxo Markets, noted that fears surrounding tariffs are overshadowing expectations for tax cuts due to the elevation of known China hawks to prominent positions within Trump’s Cabinet.
The repercussions of the U.S. election have been felt worldwide, with the MSCI index tracking equities outside the U.S. recording its worst performance since the global market turmoil on August 5. An index measuring developingmarket currencies has lost over 1% following the election results, nearly erasing this year’s gains.
In response to potential higher tariffs under a Trump administration, China expressed its discomfort with the weakening yuan through its daily reference rate, which was set 445 pips stronger than analysts’ average estimates in a Bloomberg survey. Additionally, Beijing has begun marketing dollardenominated bonds in Saudi Arabia, marking its first debt issuance in U.S. currency since 2021.
As markets brace for upcoming economic data releases, analysts predict that Wednesday’s consumer price index (CPI) report may confirm fears of rising inflation. Expectations indicate a 0.2% increase in the CPI for the fourth consecutive month. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, stated that he would closely monitor inflation data to determine if another interestrate cut is warranted during the Fed’s December meeting.
In cryptocurrency markets, Bitcoin experienced a decline after reaching nearly $90,000 earlier this month—a significant rally that captured investor attention. Meanwhile, Trump announced that Elon Musk and Vivek Ramaswamy would lead efforts in establishing a Department of Government Efficiency.
In corporate news, Seven & i Holdings Co., a major Japanese retail group, is reportedly considering a management buyout to take itself private. This transaction could involve funding from banks and Itochu Corp., with an estimated value of ¥9 trillion (approximately $58 billion). Such moves reflect broader trends in corporate restructuring amid uncertain economic conditions.
Key Market Movements
- Japan’s Nikkei 225: Down by 1%, closing at 31,458.42.
- Hong Kong’s Hang Seng Index: Fell by 0.5%, ending at 16,698.36.
- Shanghai Composite: Experienced minimal changes but remained under pressure.
- S&P 500 Futures: Showed little movement as traders awaited further developments.
Currency Trends
- Japanese Yen: Declined by 0.1%, trading at approximately 154.79 per dollar
- Euro: Remained stable at $1.0622.
- Offshore Yuan: Slightly appreciated by 0.1%, reaching 7.2331 per dollar.
Commodity Prices
- West Texas Intermediate Crude: Rose by 0.4% to $68.38 per barrel.
- Gold: Increased by 0.4%, trading at $2,608.18 per ounce.
As traders brace for potential shifts in U.S. economic policy under Trump’s administration, global markets remain volatile amid rising inflation concerns and uncertainty surrounding international trade relations. The interplay between U.S. domestic policy and global economic stability will be critical as investors navigate these turbulent waters in the coming months.
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