A preview of the day ahead in Asian markets.
The first full day of financial markets trading of US President Donald Trump’s second term is set to get off to a strong start on Tuesday, with Mr Trump’s seemingly more measured approach to tariffs providing an immediate boost to market sentiment. investors.
On Monday, Mr. Trump released a broad trade memo that stopped short of immediately imposing new tariffs on his major trading partners, something he had already indicated he would do on his first day in office. Instead, trade relations with China, Canada and Mexico will be assessed and reviewed before it decides what steps to take.
U.S. stock and bond markets were closed for Martin Luther King Jr. Day on Monday, but currency markets were open, and the dollar’s sharp decline reflected investors’ relief at Mr. Trump’s tariff rhetoric, which appears adopt a less belligerent approach.
Even if it is only temporary.
The Dollar Index collapsed 1%, its biggest decline since August. The latest data from the Commodity Futures Trading Commission shows funds held a net long dollar position against a range of currencies worth $35 billion last week, the largest in nine years.
The dollar has appreciated about 10% since September, alongside a more than 100 basis point rise in U.S. Treasury yields, a tightening of financial conditions that has hit Asian and emerging markets hard. A pause or reversal in the trend should ease this squeeze.
U.S. stock futures are pointing to gains of around 0.4% on Wall street Tuesday. Asian markets were already on edge on Monday, with the MSCI Asia ex-Japan and Nikkei 225 indices both up more than 1%.
Markets around the world will be sensitive to the deluge of headlines expected to arrive from Washington in the coming days as the new administration announces policy directives and executive orders. The week promises to be volatile.
-Crude oil prices fell further from last week’s six-month high, falling for the third straight day as traders await details on Trump’s executive order declaring a national energy emergency and promising to refill strategic reserves .
Cryptocurrencies, on the other hand, were more buoyant as the self-proclaimed “crypto president” was sworn in and bitcoin surged to a new high just shy of $110,000.
The Asian economic calendar on Monday is light, with producer price inflation in South Korea and consumer price inflation in Hong Kong the only major economic indicators forecast. Markets should take inspiration from the news coming out of Washington, the recovery of global stocks and the fall of the dollar.
Here are the main developments that could steer markets on Tuesday:
– Reaction to Trump’s first day in office
– South Korea IPP (December)
– Hong Kong CPI (December)
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