Business

Markets mixed after Wall St losses as traders weigh US rates outlook

Agence France-Presse

November 18, 2024 | 7:05pm

Markets mixed after Wall St losses as traders weigh US rates outlook

An electronic board displays the Nikkei average closing price at 41,190.68 down 1,033 yen, the biggest drop this year, on the Tokyo Stock Exchange in Tokyo on July 12, 2024.

AFP / Kazuhiro Nogi

HONG KONG, China — Asian markets were mixed Monday following a sell-off on Wall Street as investors scale back their bets on Federal Reserve interest rate cuts owing to worries Donald Trump could reignite inflation.

A warning from US central bank boss Jerome Powell that reductions in borrowing costs were not preset dented optimism last week, while traders were also keeping tabs on the president-elect's cabinet choices, with several China hawks lined up.

Expectations that a second Trump administration will impose painful fresh tariffs on Chinese goods has added to the unease and ramped up fears of another trade war between the economic powerhouses.

All three main indexes on Wall Street ended deep in the red Friday, with the Nasdaq down more than two percent, after Powell's remarks the day before.

After Trump's victory at the start of the month, markets had already been winding back their expectations for the number of rate cuts the Fed would announce next year.

The bank's next policy decision in December will be closely followed for an idea about officials' plans.

Still, Philipp E. Bartschi, chief investment officer at Bank J. Safra Sarasin, was upbeat about the outlook for equities.

"The clear and swift outcome of the US elections reduced uncertainty and investors' appetite for risk improved significantly," he said in a note. "This trend is likely to continue in the coming weeks and ensure a positive year-end on the financial markets.

"With the election of Donald Trump as US president, the volatility in macro forecasts is likely to increase due to his plans. Deregulation and tax cuts would accelerate nominal growth, while a trade war should slow growth.

"Although many of Trump's proposals will only have an impact after a delay -- if at all -- consumer sentiment and the business climate are likely to improve in the short term. A possible US recession has receded into the distant future."

Shares in Hong Kong were helped by hopes for more Chinese stimulus after a recent raft of measures, while a call by authorities for firms to step up efforts to boost shareholder returns also provided support.

Sydney, Seoul, Wellington, Manila, Mumbai and Bangkok also rose along with London, Paris and Frankfurt.

However, Tokyo, Shanghai, Singapore, Taipei and Jakarta fell.

The lowering of US rate cut expectations helped the dollar hold onto gains against its major peers, with investors also tracking comments from Japanese authorities amid speculation they could intervene in forex markets if the yen weakens too much, too quickly.

And bitcoin sat around $91,600, having hit another record high of $93,462 last week on hopes Trump will push for more deregulation of the crypto market. Commentators expect the unit to break $100,000 soon.

Dealers were also awaiting the release of earnings from chip titan Nvidia this week, after the firm led a surge in tech firms this year owing to an explosion in demand for all things linked to artificial intelligence.