Asian stocks fell behind US and European market futures as traders assessed the implications of Donald Trump’s cabinet composition and policy ambition. Concerns that Trump’s policies, including tax cuts, could increase inflation caused the MSCI Asia Pacific Index to decline for a third day as Treasury yields increased. Hong Kong stocks had the biggest declines in Asia when it was reported that the former president was about to appoint two persons with a history of criticizing China to important positions in his new government.
The previous president’s actions are anticipated to have a less favorable effect on assets abroad, even though the so-called Trump trade helps to strengthen the currency and US stocks. Global economies will be impacted by his proposal to raise tariffs, particularly those of nations like China that are significant exporters to the US.
Tuesday saw a 0.13 percent decline in MSCI’s broadest index of Asia-Pacific stocks outside of Japan, closing at 620.05, slightly below the two-and-a-half-year high of 627.66 reached on Monday. So far this year, the index has increased by 17%.
US Stocks
Wall Street saw overnight gains after US inflation data exceeded market expectations, which also helped Asian markets rise. On Wednesday, the Nasdaq Composite and the S&P 500 continued their winning run for the fifth consecutive session. The S&P 500 increased 0.38%, or 20.78 points, to 5,455.21, while the Dow Jones Industrial Average increased 242.75 points, or 0.61%, to 40,008.39. The Nasdaq Composite gained 4.99 points, or 0.03%, to close at 17,192.60.
Asia’s markets are still processing Beijing’s most recent stimulus plan, which reduced local governments’ debt load somewhat but fell short of the comprehensive fiscal support that many investors had anticipated. Credit expansion slowed faster than experts predicted last month, according to Chinese data released Monday.
The US inflation data that is anticipated on Wednesday appears to be the next big topic on the agenda. In comparison to September’s data, the core consumer price index—which does not include food and energy—likely increased at the same rate on a monthly and annual basis.
