(Bloomberg) — Asian shares rose, following their US peers higher, as investors positioned for a second Donald Trump presidency and an expected Federal Reserve interest-rate cut.
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Chinese stocks were among the biggest gainers on optimism Beijing will roll out more stimulus measures. The S&P 500 surged 2.5% Wednesday, its best post-election day in history, and the Nasdaq 100 advanced 2.7%. The Fed is forecast to trim its benchmark rate by a quarter point Thursday.
The rally in US stocks reflected expectations that a Trump policy agenda favoring lower taxes and less regulation may support corporate profits. At the same time, Treasury 10-year yields surged 16 basis points on Wednesday on expectations the president-elect’s fiscal plans and proposal to hike tariffs will boost inflation and erode the Fed’s ability lower rates.
“After digesting Trump’s win of the presidency, investors in Asia are now focusing on China’s impending stimulus announcements,” said Frederic Neumann, a chief Asia economist at HSBC Holdings Plc in Hong Kong. “Hopes are rising that China may unveil a substantial fiscal package in the coming days, providing a shot in the arm for its languishing economy.”
Chinese stocks opened lower but then swung to a gain, with the CSI 300 Index climbing as much as 2%. Consumer and property shares rallied as traders bet Beijing would shift its focus to boosting domestic demand to offset any negative impact from Trump’s return to the White House.
Chinese policymakers lowered their daily reference rate for the yuan to the lowest since late 2023, a sign the central bank is allowing depreciation after a surge in the dollar pummeled the currency.
In other positive news, a report showed China’s export growth surged in October to the fastest pace in more than two years, extending a months-long run of resilience that helped sustain the economy before a barrage of stimulus measures aimed at shoring up domestic demand.
“It’s very likely that we will see significantly more fiscal and monetary stimulus from Beijing, which could offset some of the trade headwinds,” said David Chao, global market strategist at Invesco in Singapore. “All eyes are on what may emerge from China’s policy toolkit after the conclusion of the NPC standing committee meeting on 8th November.”
China’s regulators have told the nation’s banks to lower the rates they pay for demand deposits from other financial institutions in a move to free up idle funds to boost the economy, according to people familiar with the matter.
The yen strengthened after Japan’s chief currency official Atsushi Mimura said the authorities would take appropriate action against excessive currency moves. The currency had tumbled about 2% on Wednesday as the dollar surged after Trump’s victory.
Bloomberg’s dollar index ticked lower after jumping about 1.3% on Wednesday. Treasury 10-year yields slipped one basis point to 4.42%.
Spreads on Asian investment-grade dollar bonds tightened to a record low, with yield premiums on the notes declining by at least one basis point, according to credit traders. Spreads had narrowed to 73 basis points Wednesday, then the lowest based in data compiled by Bloomberg stretching back to 2009.
Fed Decision
Fed officials are widely forecast to lower their benchmark rate by 25 basis points at the end of their two-day meeting, a move that will come on the heels of the half-point cut in September. They have projected one more quarter-point reduction this year, in December, and an additional full point of reductions in 2025, according to the median estimate released in September.
“What investors really want to know is: How will President-elect Donald Trump’s proposed fiscal and tariff policies affect the FOMC’s rates outlook,” Bloomberg economist Anna Wong wrote in a research note. “FOMC participants are probably wrestling with that very question.”
Wall Street’s “fear gauge” — the VIX — tumbled Wednesday by the most since August. Almost 19 billion shares changed hands on US exchanges, 63% above the daily average in the past three months.
Bitcoin, viewed by many as a so-called Trump trade after he embraced digital assets during his campaign, slipped Thursday after rising to a record high the day before. Oil gained after a roller-coaster session on Wednesday as traders weighed the likely impact of Trump’s election victory on the crude market.
Key events this week:
China trade, forex reserves, Thursday
UK BOE rate decision, Thursday
Fed rate decision, Thursday
US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 2:50 p.m. Tokyo time
Japan’s Topix rose 1.1%
Hong Kong’s Hang Seng rose 1.3%
The Shanghai Composite rose 1.5%
Euro Stoxx 50 futures rose 0.2%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.2% to $1.0746
The Japanese yen rose 0.4% to 154.01 per dollar
The offshore yuan rose 0.2% to 7.1890 per dollar
Cryptocurrencies
Bitcoin fell 1.5% to $74,826.57
Ether rose 5.8% to $2,845.24
Bonds
The yield on 10-year Treasuries was little changed at 4.43%
Japan’s 10-year yield advanced three basis points to 1.010%
Australia’s 10-year yield advanced one basis point to 4.64%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson, Haidi Lun, Finbarr Flynn and Winnie Hsu.
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