(Bloomberg) — Asian stocks may struggle in early trading after disappointing Chinese economic measures and the release of anemic inflation data over the weekend. Bitcoin reached a high of $81,000 after newly elected President Donald Trump wiped out the seven US battleground states.
Most read from Bloomberg
Australian shares fell while futures in Tokyo and Hong Kong signaled losses after China’s 10 trillion yuan ($1.4 billion) plan to help local governments deal with hidden debt failed to introduce new measures to boost domestic demand. U.S. contracts headed higher after the S&P 500 rose 0.4% on Friday, capping the year’s best week for stocks, ahead of Trump’s pro-growth agenda.
A softer start is expected in Asia after the region’s shares rose 2.4% last week on improved sentiment following the Federal Reserve’s rate cut and hopes of more stimulus in China. Investors are now watching to see how quickly Trump will implement his fiscal and protectionist trade policies, including proposed tariffs on China.
“The market’s next move will depend on whether Trump prioritizes cutting taxes or raising rates, each of which has vastly different impacts,” Tony Sycamore, an analyst at IG Markets in Sydney, wrote in a note. “This clarification could be months away and it is worth remembering that Trump’s first move in 2016 was to cut taxes, which sent stock markets soaring before tariffs on China created a headwind.”
Bitcoin rose above $81,000 for the first time in the early hours of Asia after hitting a record $80,000 on Sunday, driven by the incoming president’s support for digital assets and the election of pro-crypto lawmakers.
Meanwhile, sentiment toward China is wavering as foreign direct investment slumps due to geopolitical tensions, competition from domestic industries and concerns about the country’s economic prospects. Consumer inflation fell to near zero in October, suggesting that the government’s latest round of stimulus is far from enough to free the economy from the grip of deflation.
“Many believe that China will keep its tactical powder in play as Trump-China tariff negotiations evolve, and may respond in a more targeted manner to contain the likely economic fallout,” said Chris Weston, chief research officer at Pepperstone Group. in Melbourne wrote in a note. “However, in the short term, this does indicate downside risk for China/Hong Kong stocks and the yuan.”
The dollar rose higher against key peers in early trading in Asia, extending last week’s gains on concerns that Trump’s fiscal policies will fuel inflation. As the U.S. Treasury yield curve flattened on Friday, companies including BlackRock, JPMorgan Chase and TCW Group warned that the bond market sell-off is likely far from over. Cash Treasuries are closed on Monday for a holiday.
Federal Reserve Bank of Minneapolis President Neel Kashkari indicated over the weekend that the central bank could cut rates less than previously expected amid a strong U.S. economy. However, Kashkari emphasized that it is still too early to determine the impact of Trump’s policies.
Oil was little changed near $70 a barrel in early trading in Asia, after falling 2.7% on Friday on disappointment with China’s stimulus measures. Gold was stable.
This week, traders will analyze data from Australian jobs to Chinese retail sales and industrial production, US and Eurozone inflation, as well as growth rates in the UK and Japan. A slew of Federal Reserve officials are scheduled to speak, which could help reflect the central bank’s thinking following the election results.
Main events this week:
Japanese current account, Monday
Denmark CPI, Monday
Norway CPI, Monday
The United Nations climate conference, COP29, starts on Monday
Germany CPI, Tuesday
UK unemployment claims, unemployment, Tuesday
Fed speakers, including Christopher Waller, Tuesday
Japanese PPI, Wednesday
Industrial production in the eurozone, Wednesday
US CPI, Wednesday
Australian unemployment, Thursday
Eurozone GDP, Thursday
US PPI, unemployment claims, Thursday
Reserve Bank of Australia Governor Michele Bullock will speak on Thursday
Fed Chairman Jerome Powell speaks Thursday
ECB President Christine Lagarde speaks on Thursday
BOE Governor Andrew Bailey speaks Thursday
Japan’s GDP, industrial production, Friday
Chinese retail sales, industrial production, fixed asset investment, Friday
UK GDP, industrial production, trade balance, Friday
