Hong Kong: Asian markets stumbled on Thursday following a lacklustre session on Wall Street, as investor concerns deepened over US inflation and the Federal Reserve’s interest rate strategy ahead of Donald Trump’s second presidency.
A report suggesting the president-elect may declare a national economic emergency to justify imposing tariffs on all imported goods heightened uncertainty in global trading.
Meanwhile, data showed minimal growth in Chinese consumer inflation despite significant stimulus measures in late 2024, casting a shadow over Asia's largest economy. In the UK, the pound hit its lowest level in over a year, reflecting fears of a weakening economy.
Asian equities are grappling with the Federal Reserve’s December pivot to a hawkish stance, which dampened expectations for significant rate cuts in 2025. Persistent inflation and a strong US labour market continue to weigh on investor sentiment.
Trump’s proposed tax cuts, immigration reforms, and tariff hikes have raised fears of inflationary pressures, pushing the 10-year US Treasury yield higher, with speculation it may exceed 5% for the first time since October 2023.
The Dow and S&P 500 posted modest gains on Wall Street, while the Nasdaq slipped. Across Asia, Hong Kong and Shanghai fell amid signs of easing Chinese inflation in December, adding pressure on Beijing to intensify stimulus efforts.
Economists, including Lynn Song of ING, anticipate more aggressive fiscal and monetary policy from China in 2025 to counter the global and domestic challenges stifling growth.
Markets in Tokyo, Sydney, Mumbai, and other regional hubs also registered losses, though Seoul, Manila, and Jakarta saw slight gains. In Europe, London opened lower as the pound weakened, and Paris and Frankfurt were in decline.__AFP
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