(Bloomberg) — Asia’s benchmark stock index swung between gains and losses as investors weighed the ramifications of a second Trump presidency, with its promise of steeper tariffs.
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Equity gauges rose in Hong Kong and China, while dropping in Australia and South Korea. That was after the S&P 500 surged 2.5% Wednesday, its best post-election day in history and the Nasdaq 100 advanced 2.7%. The Federal Reserve is forecast to cut interest rates on Thursday.
The gains for US stocks reflected expectations that a Trump policy agenda favoring lower taxes and less regulation may support corporate profits. At the same time, Treasury 10-year yields surged 16 basis points on Wednesday on expectations that his fiscal plans and proposal to hike tariffs will drive inflation higher and erode the ability of the Fed to trim borrowing costs.
China’s benchmark CSI 300 Index swung to a gain Thursday after dropping as much as 1% at the open. Trump has pledged to introduce tariffs on Chinese goods to support US manufacturing.
“I think now the world has to be seen through the kind of lens of Trump effectively and the kind of zero sum game and the bilateral way that he approaches foreign relations,” Kyle Rodda, a senior market analyst at Capital.Com Inc., said on Bloomberg Television. “China isn’t looking quite as strong subsequently, those trades are likely to continue to manifest, at least for the time being. Again, it’s all a part of that Trump thematic.”
The yen edged higher Thursday after Japan’s chief currency official Atsushi Mimura said the authorities will take appropriate action against excessive currency moves. The currency had tumbled about 2% on Wednesday following Trump’s victory. Treasury 10-year yields slipped one basis point in Asia to 4.42%.
China lowered its daily reference rate for the yuan to the lowest since late 2023, a sign the central bank is allowing depreciation after a surge in the dollar pummeled the currency.
Fed officials are widely expected to lower their benchmark rate by a quarter percentage point, a move that will come on the heels of the half-point cut in September. They have projected one more quarter-point reduction this year, in December, and an additional full point of reductions in 2025, according to the median estimate released in September.
“The Fed is still likely to cut by 25 basis points at Thursday’s meeting and likely to cut again in December,” said Yung-Yu Ma at BMO Wealth Management. “As we move into 2025, we believe it’s possible that we only see two or three cuts for the year depending on the mix of policy and growth that plays out.”