Benchmark indexes in Japan climbed for a third day echoing the gains on Wall Street, while those in South Korea and Australia ticked lower. The S&P 500 jumped 2.5% higher Wednesday, its best post-election day in history, and the Nasdaq 100 rose 2.7%. The Federal Reserve is expected to cut interest rates on Thursday.
Gains for US stocks reflected expectations that a Trump policy agenda favoring lower taxes and less regulation may support corporate profits. An index of US banks surged almost 11% on forecasts that potential tax cuts, reduced regulation and the prospect of elevated interest rates would support bank earnings. A benchmark of US small-caps, which can outperform during periods of economic expansion, rose 5.8%.
Hong Kong equity futures dropped, as did a gauge of US-listed Chinese stocks. Trump has pledged to introduce tariffs on Chinese goods to support US manufacturing.
“For now, investor sentiment is pro-growth, pro-deregulation, and pro-markets,” said David Bahnsen, chief investment officer at the Bahnsen Group. “There is also an assumption that M&A activity will pick up and that more tax cuts are coming or the existing ones will be extended. This creates a strong backdrop for stocks.”
Treasury yields jumped Wednesday reflected the prospect that Trump election promises including immigration curbs and tariffs may stoke inflation, resulting in elevated interest rates. The moves also signaled concern that Trump’s proposals will boost the budget deficit and spur higher bond supply. Australian and New Zealand bonds were little changed Thursday after climbing the day before alongside moves for Treasuries. Selling pressure in US government debt pushed the 10-year yield up 16 basis points to a four-month high.Bloomberg’s dollar index rose 1.3% Wednesday, while the yen slid about 2%. Japan’s currency edged higher Thursday after Japan’s chief currency official Atsushi Mimura said the authorities will take appropriate action against excessive currency moves.
Fed officials are widely expected to lower their benchmark rate on Thursday by a quarter percentage point, 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, in December, and an additional full point of reductions in 2025, according to the median estimate released in September.
“The Fed is still likely to cut by 25 basis points at Thursday’s meeting and likely to cut again in December,” said Yung-Yu Ma at BMO Wealth Management. “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.”
Bitcoin, viewed by many as a so-called Trump trade after he embraced digital assets during his campaign, slipped early Thursday after hitting a record high the day before. Commodities came under pressure Wednesday, with gold and copper tumbling, while oil edged lower.
In Asia, data set for release includes gross domestic product figures for the Philippines, trade for Australia and foreign reserves and trade for China.
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.
Source link
