Asian markets stutter with focus on China as Trump picks team

Korea market — The lack of new stimulus from Beijing dampened sentiment after a series of measures unveiled in September fuelled a market rally. (AP pic)

HONG KONG: Traders struggled Tuesday to bounce back from the previous day’s losses in most markets sparked by disappointment over China’s economic support measures, while keeping tabs on the US as president-elect Donald Trump builds his cabinet.

The tepid start to the day came despite another record close on Wall Street, fuelled by expectations that Trump will push through promised business-friendly policies and hopes that his administration will be pro-crypto, which saw bitcoin push to a new record close to US$90,000.

While US investors are gearing up for another strong four years as Trump cuts taxes and eases regulations, their Asian counterparts – particularly in China – are keeping a wary eye on developments amid fears of another debilitating trade war.

Beijing’s failure to announce any new stimulus at Friday’s much-anticipated news conference has dampened sentiment on trading floors this week, taking the wind out of investors’ sails after a raft of measures unveiled at the end of September fuelled a market rally.

However, some observers said the decision may have been down to Chinese officials keeping their powder dry in order to react to the impacts caused by any Trump measures, such as tariffs.

Asian markets mostly fell in early exchanges with Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei and Manila all lower, while Tokyo and Wellington edged up.

The dollar extended gains against its peers that started after news of Trump’s election, which has sparked bets on a pick-up in inflation that could complicate the Federal Reserve’s plans to lower interest rates.

US consumer price index data due Wednesday will be closely watched as investors try to ascertain the bank’s plans for next month’s monetary policy meeting.

“We assume the Trump administration will deliver on their key policy proposals with the degree and timing of these policies the bigger uncertainty,” said National Australia Bank’s Rodrigo Catril.

“Most of these policies (lower taxes, tariffs, immigration, deregulation, unfunded expansionary fiscal policy) can be regarded as pro- growth and or inflationary.

“This means, all else equal, a shallower Fed easing cycle and a stronger dollar.”

With Trump due to return to the White House in just over two months’ time, a big question on investors’ minds is when he will embark on his trade agenda.

“Wall Street is tentatively banking on a late 2025 or early 2026 timeline, allowing his team time to attempt diplomacy before reaching for the tariff stick,” Stephen Innes, managing partner of SPI Asset Management, said.

“But word on the street hints that Trump could fast-track his tariff push, possibly leaning on current trade data from China to justify earlier action. And with China’s trade surplus on track to hit record highs this year, that showdown may not be too far off.”

In the crypto sphere, bitcoin hit a peak just above US$89,599, putting it well within range of the key US$100,000 marker.

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