Author: Jamie McGeever
(Reuters) – A look at the day ahead in Asian markets.
The first full day of financial markets trading in US President Donald Trump’s second term is set to get off to a strong start on Tuesday, with Trump’s seemingly more measured approach to tariffs set to hit investor sentiment immediately.
On Monday, Trump issued a sweeping trade memorandum in which he did not immediately impose new tariffs on key trading partners, something he had previously indicated he would do on his first day in office. Instead, trade relations with China, Canada and Mexico will be assessed and reviewed before deciding what steps to take.
US stock and bond markets were closed for Martin Luther King Jr. Day. on Monday, but foreign exchange markets were open and the dollar’s sharp decline across the board reflected relief among investors that Trump appeared to be toning down tariff rhetoric in favor of a less bellicose approach.
Even if it turns out to be only temporary.
It fell 1%, the biggest drop since August. The dollar may have been poised to fall, thanks to hedge fund positioning — the latest data from the Commodity Futures Trading Commission showed funds had a net long dollar position against a range of currencies worth $35 billion last week, the most in nine years.
The dollar has gained about 10% since September as US Treasury yields rose more than 100 basis points, tightening financial conditions that have hit Asian and emerging markets particularly hard. A break or reversal should ease that grip.
U.S. stock futures pointed to a gain of about 0.4% on Wall Street on Tuesday. Asian markets were already in the lead on Monday, with indices and indices rising more than 1%.
Markets around the world will be sensitive to the flood of headlines likely to emanate from Washington in the coming days as the new administration announces policy guidance and executive orders. The week will be variable.
prices fell further from last week’s six-month high, falling for a third straight day as traders await details on Trump’s executive order declaring an energy emergency and promising to replenish strategic reserves.
Cryptocurrencies, on the other hand, were more buoyant when the self-styled “crypto president” was sworn in, and bitcoin soared to a new record of barely $110,000.
Monday’s Asian economic calendar is weak, with producer price inflation from South Korea and consumer price inflation from Hong Kong the only major economic indicators. Expect markets to look to headlines from Washington, a rise in global stocks and a fall in the dollar.
Here are the key developments that could provide more guidance to markets on Tuesday:
– Reaction to Trump’s first day in office
– PPI of South Korea (December)
– Hong Kong CPI (December)
