Most Asian shares rose, following their US peers higher, as investors positioned for a second Donald Trump presidency and an expected Federal Reserve interest-rate cut.
Equity gauges rallied in Hong Kong and China on expectations that Beijing will roll out more stimulus. That was after the S&P 500 surged 2.5% Wednesday, its best post-election day in history, and the Nasdaq 100 advanced 2.7%. The Fed is forecast to trim its benchmark rate by a quarter point Thursday.
The gains for US stocks reflected expectations that a Trump policy agenda favoring lower taxes and less regulation may support corporate profits. At the same time, Treasury 10-year yields surged 16 basis points on Wednesday on expectations the president-elect’s fiscal plans and proposal to hike tariffs will boost inflation and erode the Fed’s ability lower rates.
“After digesting Trump’s win of the presidency, investors in Asia are now focusing on China’s impending stimulus announcements,” said Frederic Neumann, a chief Asia economist at HSBC Holdings Plc in Hong Kong. “Hopes are rising that China may unveil a substantial fiscal package in the coming days, providing a shot in the arm for its languishing economy.”
Chinese stocks opened lower but then swung to a gain. Consumer and property shares rallied as traders bet Beijing would shift its focus to boosting domestic demand to offset any negative impact from Trump’s return to the White House.
Chinese policymakers lowered their daily reference rate for the yuan to the lowest since late 2023, a sign the central bank is allowing depreciation after a surge in the dollar pummeled the currency.
In other positive news, China’s export growth surged in October to the fastest pace in more than two years, extending a months-long run of resilience that helped sustain the economy before a barrage of stimulus measures aimed at shoring up domestic demand.
“It’s very likely that we will see significantly more fiscal and monetary stimulus from Beijing, which could offset some of the trade headwinds,” said David Chao, global market strategist at Invesco in Singapore. “All eyes are on what may emerge from China’s policy toolkit after the conclusion of the NPC standing committee meeting on 8th November.”
China’s regulators have told the nation’s banks to lower the rates they pay for demand deposits from other financial institutions in a move to free up idle funds to boost the economy, according to people familiar with the matter.
The yen rose in Asian trade after Japan’s chief currency official Atsushi Mimura said the authorities will take appropriate action against excessive currency moves. The currency had tumbled about 2% on Wednesday following Trump’s victory.
Bloomberg’s dollar index ticked lower in Asia after jumping about 1.3% on Wednesday. Treasury 10-year yields slipped one basis point to 4.42%.
Spreads on Asian investment-grade dollar bonds tightened to a record low, with yield premiums on the notes declining by at least one basis point, according to credit traders. Spreads had narrowed to 73 basis points Wednesday, then the lowest based in data compiled by Bloomberg stretching back to 2009.
Fed Decision
Fed officials are widely forecast to lower their benchmark rate by 25 basis points at the end of their two-day meeting, a move that will come on the heels of the half-point cut in September. They have projected one more quarter-point reduction this year and an additional full point of reductions in 2025, according to the median estimate released in September.
“As we move into 2025, we believe it’s possible that we only see two or three cuts for the year depending on the mix of policy and growth that plays out,” said Yung-Yu Ma at BMO Wealth Management
Wall Street’s “fear gauge” — the VIX — tumbled Wednesday by the most since August. Almost 19 billion shares changed hands on US exchanges, 63% above the daily average in the past three months.
Bitcoin, viewed by many as a so-called Trump trade after he embraced digital assets during his campaign, slipped Thursday after rising to a record high the day before. Oil gained after a roller-coaster session on Wednesday as traders weighed the likely impact of Trump’s election victory on the crude market.
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