(Bloomberg) — Stocks in Asia wavered as traders digested Donald Trump’s latest cabinet appointments, a day after his tariff threats roiled emerging markets.
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The MSCI Asia Pacific Index was little changed, with equities falling in Japan while those in Hong Kong and China climbed. A Bloomberg gauge of the dollar edged lower after the currency’s strength on Tuesday pressured the Mexican peso and Chinese yuan, among others.
The president elect’s tariffs agenda seemed to gather further momentum on Wednesday, with Trump naming Jamieson Greer as the US Trade Representative and Kevin Hassett to direct the National Economic Council. Greer was intimately involved in Trump’s first-term trade policy decisions. A slew of data from the US due later on inflation and economic growth may provide clues to the Federal Reserve’s next policy move.
“Prospects of further US tariffs remain a worry for Asian markets,” said Frederic Neumann, chief Asia economist at HSBC Holdings Plc. “The appointment of Greer to USTR is largely in line with expectations, indicating a more restrictive trade stance by the US under the Trump administration. It is clear that ‘Trump means business’ when it comes to tariffs.”
The Reserve Bank of New Zealand lowered the official cash rate by 50 basis points as expected. The local dollar, which jumped on the central bank’s new rate projections, pared some of its gains as the governor said it could cut by another half point in February.
Middle East tensions abated somewhat as President Joe Biden said Israel reached a cease-fire deal with the Lebanese militant group Hezbollah after weeks of talks mediated by the US.
The Japanese yen gained for a third day against the dollar. US equity futures advanced after the S&P 500 notched another record.
US 10-year yields was little changed during Wednesday Asian trading, following a three basis point increase to 4.31% in the previous session. Fed officials indicated support for a careful approach to rate cuts, according to minutes from their latest policy meeting.
That comes as a bearish tone takes hold in the market for interest-rate options, suggesting that traders are bracing for Treasury yields to surge anew in the coming weeks. The wagers are a reminder that even though yields have surrendered the brunt of their post-election advance, investors are well aware of the potential for the so-called Trump trade to gain traction again.
