HONG KONG — On Wednesday, Asian markets experienced declines, reflecting a pullback in momentum from the recent surge in U.S. stocks often referred to as the “Trump trade,” which followed Donald Trump’s election win.
Japan’s Nikkei 225 index fell by 1.1%, settling at 38,953.44, as wholesale inflation reached its highest level since July of the previous year. The Bank of Japan reported that the corporate goods price index climbed 3.4% year-over-year in October, a rise largely linked to the weakening of the yen against the U.S. dollar.
In South Korea, the Kospi index dropped 1.5%, down to 2,445.90, with Samsung Electronics shares declining by 2.1%—their lowest point in over four years.
Hong Kong’s Hang Seng index saw a continuous downturn, retracting 0.5% to 19,754.92, marking its fourth consecutive day of losses. Meanwhile, the Shanghai Composite rose slightly by 0.2%, reaching 3,426.98.
Australia’s S&P/ASX 200 also took a hit, decreasing nearly 1.0% to 8,178.00. Concurrently, U.S. futures showed a downtrend while oil prices experienced a slight uptick.
On the previous day, the S&P 500 fell by 0.3% to 5,983.99 just a day after reaching a new all-time high. The Dow Jones Industrial Average decreased by 0.9% to 43,910.98, while the Nasdaq composite dipped 0.1% to 19,281.40.
The upward trend of stocks in the preceding days was driven by optimistic expectations regarding Trump’s tax policies and regulatory stance, believed to fuel quicker economic growth alongside an anticipated rise in U.S. government debt and inflation. Smaller U.S. companies, which are expected to benefit the most from Trump’s “America First” initiative, had particularly strong performances. However, these stocks began to reverse their gains on Tuesday, with the Russell 2000 index, which represents smaller companies, falling 1.8%. Even Tesla, linked to Trump’s supporter Elon Musk, suffered a decline of 6.1%, marking its first loss since before the elections.
The increase in Treasury yields exerted additional pressure on the stock market, especially after trading resumed following the Veterans Day observance. The yield on the 10-year Treasury note surged to 4.42% from 4.31% late on Friday. This rise is significant within the context of the bond market.
Since September, Treasury yields have been rising sharply, partly due to the U.S. economy outperforming expectations. There are hopes that the economic resilience can be maintained as the Federal Reserve continues to lower interest rates to support job growth, now that inflation is nearing the 2% target.
Trump’s rhetoric, which includes taxation and tariffs, has contributed to rising yields as analysts fear these policies could increase inflation and the national debt, imposing constraints on the Fed’s ability to reduce interest rates. Although lower rates can stimulate economic growth, they could also reinforce inflation pressures.
Another crucial update on inflation is expected Wednesday, with the U.S. government releasing new data reflecting consumer prices nationwide. Economists predict a rise in inflation from 2.4% in September to 2.6% in October, while core inflation—which excludes volatile food and fuel prices—is anticipated to remain steady at around 3.3%.
In the cryptocurrency space, bitcoin hit a new record before retracting slightly. Trump has shown support for cryptocurrencies and declared his ambition for the U.S. to become a global crypto hub. Bitcoin reached a peak of $89,995, according to estimates, before falling back to approximately $89,500; it began the year below $43,000.
On the energy front, benchmark U.S. crude oil rose by 26 cents to $68.38 per barrel, while the international oil standard, Brent crude, decreased by 31 cents to $72.20 per barrel.
In foreign exchange markets, the U.S. dollar increased to 154.75 Japanese yen from 154.51 yen. The euro was priced at $1.0623, down from $1.0625, illustrating minor fluctuations in currency values amidst the trading volatility.