(Bloomberg) — Stocks and government bonds advanced, with traders embracing Donald Trump’s choice of Scott Bessent as Treasury secretary as a measured choice that would inject more stability into the U.S. economy and financial markets.
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A benchmark for Asian shares rose about 1%, led by gains in Japan, South Korea and Australia. US futures also traded higher. Meanwhile, the yield on ten-year government bonds fell by five basis points to 4.35%. The dollar fell as Bitcoin recovered from a weekend decline.
Bessent, who runs macro hedge fund Key Square Group, has indicated he will support Trump’s tariff and tax cut plans, but investors expect him to prioritize economic and market stability over political point scoring. The nomination has allayed concerns about the incoming president’s protectionist policies, which threatened to fuel inflation, worsen trade tensions and increase market volatility.
Elements of the so-called Trump Trade, characterized by a rising dollar and rising Bitcoin, are cooling as traders scale back bets on higher interest rates that could result from pricier imports and lower taxes.
“We have Trump’s reflationary agenda, with obviously maybe someone in charge of the economy at the Treasury Department and probably more gradual,” Vincent Juvyns, global market strategist at JPMorgan Asset Management, told Bloomberg TV. “American exceptionalism will continue to exist to some extent on the economic front, but also on the market front.”
Bloomberg’s dollar index fell the most in more than two weeks, with the yen leading the way. Traders betting on Trump’s fiscal policies – including sweeping trade tariffs and continued economic growth – had pushed the dollar higher for eight straight weeks through Friday.
Back in Asia, stock benchmarks in India soared on Monday as Prime Minister Narendra Modi-led Bharatiya Janata Party alliance scored a resounding victory in the country’s richest state, Maharashtra. Still, local stocks remain far from their highest levels this year as global funds have withdrawn more than $14 billion since October on earnings growth concerns, high valuations and the recent US indictment of the Adani Group.
“This is a short-term relief meeting,” said Sonam Srivastava, founder of Wright Research. “We must wait for a substantial return of foreign capital.”