Tokyo (AP) As concerns grew over President-elect Donald Trump’s remark that he intends to impose broad new tariffs on China, Canada, and Mexico as soon as he takes office, Asian stocks largely fell on Tuesday.
Australia’s S&P/ASX 200 down 0.4% to 8,384.80, while Japan’s benchmark Nikkei 225 fell 1.2% to 38,305.20. The Kospi in South Korea fell 0.6% to 2,518.58. The Shanghai Composite climbed 0.4% to 3,277.82, while Hong Kong’s Hang Seng increased 0.4% to 19,223.94.
Wall Street equities increased Monday, with businesses that stand to gain the most from reduced interest rates and a more robust economy driving the increase. The S&P 500 moved closer to its record high, which was achieved two weeks ago, as it increased by 0.3% to 5,987.37. The Nasdaq composite increased 0.3% to 19,054.84, while the Dow Jones Industrial Average added 1% to its own record set on Friday, closing at 44,736.57.
Following Trump’s announcement that he wants hedge fund manager Scott Bessent to be his Treasury Secretary, Treasury yields decreased in what some analysts dubbed a “Bessent bounce.”
Bessent has advocated for lowering the deficit—the amount that the US government spends more than it receives from taxes and other sources of income. Such a strategy may allay Wall Street concerns that Trump’s proposals might result in a significantly larger deficit, which would push Treasury yields higher and cause prices to decline.
A person walks in front of an electronic stock board showing Japan’s Nikkei index at a securities firm Tuesday, Nov. 26, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
Eugene Hoshiko/Associated Press
The yield on the 10-year Treasury dropped from 4.41% late Friday to 4.26% on Monday after rising beyond 4.44% right after Trump’s election. That’s a significant step, because lower yields make borrowing money more affordable for consumers and businesses of all sizes. Additionally, they raise stock and other investment prices.
A 1.5% increase was seen in the Russell 2000 index of smaller firms. It came in barely short of the record high it had established three years prior. Since many businesses need to borrow money in order to expand, smaller businesses can benefit more from lower borrowing costs.
The yield on the two-year Treasury, which more accurately reflects market expectations for the Federal Reserve’s overnight interest rate policy, also experienced a significant decrease.
After getting inflation almost all the way down to its 2% objective, the Fed started lowering its main interest rate a few months ago from a two-decade high in an effort to keep the job market thriving. However, traders instantly lowered their predictions on the number of cuts the Fed may make next year after Trump’s election. They were concerned that the national debt would skyrocket as a result of Trump’s choice for lower tax rates and more border expenditure.
The Fed’s potential rate cut could be influenced by a report that is due on Wednesday. The Fed’s preferred underlying inflation trend rose to 2.8% last month from 2.7% in September, according to economists. The Fed would be less inclined to lower rates as sharply or as rapidly as it otherwise would if inflation increased.
The stock market saw a 16.5% increase in Bath & Body Works after the company reported a higher-than-expected earnings for the most recent quarter. The retailer of home fragrances and personal care items recently increased its full-year revenue projections.
Given high prices throughout the economy and persistently high interest rates, a lot of attention has been paid to how resilient American consumers can continue to be.
Macy’s, another large store, announced on Monday that while its sales for the most recent quarter met its goals, it will postpone the publishing of its complete financial results. It took longer to finish its inquiry after discovering that one employee had purposefully concealed up to $154 million in delivery costs. The stock of Macy’s dropped 2.2%.
Benchmark U.S. crude gained 23 cents to $69.17 a barrel in other transactions early Tuesday. The global benchmark, Brent crude, increased by 19 cents to $72.67 a barrel.
The value of the US dollar dropped from 154.11 to 153.82 Japanese yen in forex trading. The euro dropped from $1.0499 to $1.0462.
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Stan Choe, an AP Business Writer, made a contribution.
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