Markets Shift Focus to China Stimulus Expectations As Trump's Victory Shakes Markets
As the market began to accept the results of Donald Trump's victory in the US presidential election, the focus immediately turned to China, where hopes are rising for the announcement of a fiscal stimulus package in the near future to restore slow economic growth.
Investors are now speculating that Beijing will launch significant measures to stimulate domestic demand, thus providing important support to the consumer and real estate sectors that posted gains on Thursday.
Traders expect China's leadership to prioritize efforts to encourage domestic spending to offset any adverse effects on global trade following Trump's re-election.
Meanwhile, the yen strengthened in the Asian trading session after Japan's chief currency officer, Atsushi Mimura, signaled that authorities were ready to intervene if necessary to curb excessive volatility in the currency. The development comes after the yen plunged about 2% on Wednesday in the wake of Trump's victory, sparking fears of potential market volatility.
The dollar index edged lower in Asia, paring Wednesday's 1.3% jump. In the bond market, US Treasury yields were marginally lower, with the 10-year yield shrinking one basis point to 4.42%, reflecting a temporary pause as traders adjusted their expectations of the implications of fiscal and monetary policy under a renewed Trump administration.
Going forward, Federal Reserve officials are widely expected to cut key interest rates by 25 basis points at the end of their two-day meeting, following a 50 basis point cut in September.
The Fed has also indicated an additional cut of a quarter point by the end of the year, with projections showing an additional cut of 100 basis points in 2025.
Oil markets remained volatile, with crude prices rising in a choppy trading session as traders assessed how Trump's victory might affect energy policy and demand dynamics in the coming year.
