Asian Stocks Rise and Dollar Declines Amid Gradual Tariff Implementation News
Asian markets experienced a wave of optimism following reports of a gradual approach to U.S. tariff implementation,
positively impacting regional stocks and the dollar.
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Market Optimism
Asian Market Optimism Due to Gradual Tariff Plan
Asian markets rose significantly after reports that President-elect Donald Trump’s economic team discussed a gradual
approach to implementing tariffs. This step aims to mitigate the impact of accelerated inflation.
The dollar index recorded its first decline in six days,
with the New Zealand dollar emerging as the top performer among G10 currencies.
Stocks in Sydney and South Korea rose, and markets in China and Hong Kong also showed notable gains.
The regional MSCI index posted tangible gains,
while U.S. futures extended their slight advances following the rise in the S&P 500 index.
Frederic Neumann, Chief Economist for Asia at HSBC,
remarked that the gradual implementation could give Asian exporters time to adjust their strategies but emphasized
that tariffs would remain a burden on trade.
Bond Movements
Divergence in Bonds and U.S. Markets
In Japan, the yield on 40-year bonds reached its highest level since their introduction in 2007
amid a global sell-off in bonds and expectations of future rate hikes by the Bank of Japan. Conversely,
Japanese stocks fell after the holiday break, while the U.S. 10-year Treasury yield dipped slightly.
In the U.S. markets, the S&P 500 rose by 0.2%, while the Nasdaq 100 dropped by 0.3%.
The Dow Jones Industrial Average gained 0.9%.
China Stability
Stability in Chinese Markets and Inflation Outlook
China’s securities regulator announced plans to stabilize the market by 2025.
Discussions also continue about Elon Musk potentially acquiring the U.S. operations of TikTok.
Inflation Outlook
In the U.S., forecasts indicate a slight slowdown in core inflation,
which could support a more cautious Federal Reserve approach to interest rate cuts.
Consumer Price Index (CPI) data is expected to show relative stability, reinforcing robust holiday season spending.
Chris Larkin of E*Trade suggested that weaker-than-expected inflation data might ease recession fears
while strong earnings could add further support.
Oil prices fell slightly after hitting a five-month high in the previous session.
Asian Stocks Rise and Dollar Declines