Asian markets slipped again on Wednesday as traders grew increasingly concerned about the potential impact of President Donald Trump’s policies on the Chinese and global economies. Fears that his administration’s approach could reignite US inflation have further dampened market sentiment.
Investors are particularly wary of tax cuts, import tariffs, and regulatory rollbacks, which could drive prices higher and put renewed pressure on inflation. These prospects have also bolstered the US dollar, which has strengthened since Trump’s election victory last week.
Meanwhile, traders are closely watching bitcoin, which recently came within a hair’s breadth of breaking the $90,000 mark for the first time. Some analysts are betting the cryptocurrency could reach $100,000, driven in part by Trump’s pro-crypto stance during his campaign.
Following an initial post-election rally, Asian markets have retreated this week as Trump’s cabinet picks began to emerge. The appointment of several prominent China hawks to key positions has sparked fears of a renewed trade war between the US and China, a concern that weighed heavily on investor confidence.
These developments come as China struggles to boost domestic growth. Despite unveiling a series of economic measures at the end of September, investors were left underwhelmed by the government’s lack of fresh initiatives in a widely anticipated announcement last Friday.
Uncertainty about the global economic outlook heading into 2025 is also weighing on Asian equities. Major indexes across Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Singapore, Taipei, Wellington, Manila, and Jakarta all posted losses.
The selloff followed a negative lead from Wall Street, where all three major US indexes closed lower as investors paused after a week-long rally that had propelled the markets to new record highs.
Bitcoin was trading just above $88,404 as of mid-morning Wednesday, with its volatility continuing to attract attention.
The US dollar held onto gains, having recently touched a one-year high against the euro, and was pushing back towards 155 yen. The greenback has been supported by reduced expectations of further Federal Reserve interest rate cuts, following Trump’s victory. While analysts had previously forecast four rate cuts by June, the consensus now is for just two.
Market focus is now shifting to the release of key US October consumer price data, due later in the day. Economists are expecting a slight increase from the previous month, and the report will be closely scrutinized for insights into the Federal Reserve’s plans for interest rates when it meets again in December. The Fed recently cut rates by 25 basis points, following a 50-point reduction in September, marking the first rate cut since the pandemic began.
Key Figures (around 0230 GMT):
- Tokyo – Nikkei 225: DOWN 1.1% at 38,953.44
- Hong Kong – Hang Seng Index: DOWN 1.1% at 19,626.71
- Shanghai – Composite: DOWN 0.4% at 3,409.38
- Dollar/Yen: UP at 154.68 yen (from 154.59 yen on Monday)
- Euro/Dollar: UP at $1.0626 (from $1.0625)
- Pound/Dollar: DOWN at $1.2747 (from $1.2748)
- Euro/Pound: UP at 83.37 pence (from 83.34 pence)
- West Texas Intermediate (WTI): UP 0.1% at $68.17 per barrel
- Brent North Sea Crude: UP 0.1% at $71.94 per barrel
US Markets:
- New York – Dow: DOWN 0.9% at 43,910.98 (close)
- London – FTSE 100: DOWN 1.2% at 8,025.77 (close)
AFP
