Asian markets experienced a significant decline on Wednesday, with investors expressing growing concerns over the potential economic fallout from Donald Trump’s presidency, particularly regarding its impact on China and the global economy. The heightened anxiety stems from fears of a renewed trade war between the US and China, exacerbated by the appointment of China hawks to key positions in Trump’s administration.
Harry Murphy Cruise, an analyst at Moody’s Analytics, forecasts that tariffs on US imports from China could see a substantial increase, potentially doubling the current rates. This, coupled with the possibility of rising inflation due to tax cuts, import tariffs, and deregulation, has provided a boost to the US dollar.
The dollar surged to a one-year high against the euro and surpassed 155 yen following Trump’s victory in the election. Traders have revised their expectations for Federal Reserve interest rate cuts, scaling back from four expected cuts by June to just two, according to Bloomberg.
Meanwhile, Bitcoin continues its upward trajectory, hovering near $90,000, with some experts predicting it could hit $100,000. This surge is partly fueled by Trump’s pro-crypto stance during his campaign. However, despite Bitcoin’s rally, Asian markets have pulled back after an initial surge following Trump’s reelection.
The uncertainty surrounding the global economic outlook for 2025 has heavily impacted Asian equities. Major indices in cities like Hong Kong, Tokyo, Sydney, Seoul, Taipei, Wellington, and Mumbai saw declines. However, markets in Shanghai, Singapore, Manila, and Bangkok managed to post modest gains.
The negative sentiment in Asian markets mirrors the performance on Wall Street, where all three major indices closed in the red. Investors took a pause from the week-long rally that had driven markets to new highs.
All eyes are now on the release of crucial US October consumer price data, which is expected to show a slight uptick from the previous month. This report will provide further insights into the Federal Reserve’s stance on borrowing costs during its December meeting, following a 25-basis-point rate cut last week. The central bank had previously reduced rates by 50 points in September—the first cut since the start of the pandemic. These economic indicators will be closely watched, as they could have wide-reaching implications for both the US and global economy.
