HONG KONG: Traders struggled Tuesday to bounce back from the previous day’s losses in most markets sparked by disappointment over China’s economic support measures, while keeping tabs on the United States as president-elect Donald Trump builds his cabinet.
While US investors are gearing up for another strong four years as Trump cuts taxes and eases regulations, their Asian counterparts — particularly in China — are keeping a wary eye on developments amid fears of another debilitating trade war.
The tepid start to the day came despite another record close on Wall Street, fuelled by expectations that Trump will push through promised business-friendly policies and hopes that his administration will be pro-crypto, which saw bitcoin push to a new record close to $90,000.
Asian markets mostly fell in early exchanges with Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei and Manila all lower, while Tokyo and Wellington edged up.
The dollar extended gains against its peers that started after news of Trump’s election, which has sparked bets on a pick-up in inflation that could complicate the Federal Reserve’s plans to lower interest rates.
Shares in Hong Kong dived more than three percent Tuesday, extending the previous day’s losses on worries over China’s economy and the impact of possible US tariffs when president-elect Donald Trump takes office next year.
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The Hang Seng Index sank 3.12 percent, or 636.46 points, down at 19,790.47.
Beijing’s failure to announce any new stimulus at a much-anticipated news conference Friday has dampened sentiment on trading floors this week, taking the wind out of investors’ sails after a raft of measures unveiled at the end of September fuelled a market rally.
Traders are also gearing up for another four years of Trump after last week’s election victory following a campaign in which he warned he would impose tough tariffs on imports, including up to 60 percent on goods from China.
That has ramped up worries of another debilitating trade war between the economic superpowers.
“Wall Street is tentatively banking on a late 2025 or early 2026 timeline, allowing his team time to attempt diplomacy before reaching for the tariff stick,” Stephen Innes, managing partner of SPI Asset Management, said.
“But word on the street hints that Trump could fast-track his tariff push, possibly leaning on current trade data from China to justify earlier action. And with China’s trade surplus on track to hit record highs this year, that showdown may not be too far off.” -AFP
