(Bloomberg) — Asian shares fell to a two-month low on concerns that U.S. President Donald Trump’s proposed tariffs and picks for key government posts could fuel inflation.
Most read from Bloomberg
Stock benchmarks in Japan, Hong Kong and Australia retreated as a regional gauge hit its weakest level since September 13. The Bloomberg Dollar Spot Index edged higher ahead of a report on U.S. consumer price inflation, while the yen hovered around key levels. 155 per dollar.
Ten-year Treasury yields were little changed after rising 12 basis points on Tuesday. Traders are now pricing in about two US rate cuts through June, down from nearly four at the start of last week. US and European stock futures fell.
Sentiment toward Asian stocks has turned cautious since Trump’s election as traders expect his planned policies to further drive up inflation and slow the pace of interest rate cuts. The president-elect’s picks for key government posts are also causing unrest as he stacks his Cabinet with people ready to implement his “America First” policies on borders, trade, national security and the economy.
“While the focus remains on Trump 2.0, there is a slight inclination towards tariff fears exceeding expectations of tax cuts given announcements of China hawks being elevated to key positions in Trump’s cabinets,” said Charu Chanana, chief investment strategist at Saxo. Markets.
The US election outcome continues to reverberate around the world, with an MSCI index of non-US shares surpassing its worst day since the August 5 global rout. An index of developing world currencies lost more than 1% after the US vote, nearly wiping out this year’s gains.
Meanwhile, China signaled its discomfort over the yuan’s weakness through its daily reference rate for the currency amid the threat of higher US tariffs under the Trump administration. The finding was 445 pips stronger than the average estimate in a Bloomberg survey.
Beijing has started marketing dollar bonds in Saudi Arabia, marking the country’s first debt sale in the US currency since 2021.
On the economic front, US data due on Wednesday could reinforce concerns about an acceleration in inflation, with analysts predicting the headline consumer price index is likely to have risen 0.2% for a fourth month.