Asian Markets Rise on Trump Win, China Stimulus Hopes

Asian stocks mostly rose on Thursday, following a surge in US markets, as investors reacted to Donald Trump's re-election and the anticipation of an impending Federal Reserve interest-rate cut, reports Bloomberg.

Hong Kong and China's equity gauges rallied on expectations that Beijing will unveil further stimulus measures. This follows a historic post-election surge in the S&P 500 (up 2.5%) and Nasdaq 100 (up 2.7%) on Wednesday, and comes as the Fed is expected to trim its benchmark rate by a quarter point later today.

"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, to Bloomberg. "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."

US stocks gained on Wednesday as investors anticipated that a Trump policy agenda favoring lower taxes and less regulation could bolster corporate profits. However, Treasury 10-year yields surged 16 basis points on expectations that the president-elect's fiscal plans and tariff hikes will fuel inflation and limit the Fed's ability to cut rates.

Chinese stocks, initially opening lower, rebounded to close higher. Consumer and property shares led the rally, driven by bets on Beijing's shift towards boosting domestic demand to mitigate any negative impact from Trump's second term.

In a move signaling the central bank's willingness to allow yuan depreciation following a recent surge in the dollar, Chinese policymakers lowered the daily reference rate for the currency to its lowest level since late 2023.

In other positive news, China's export growth surged in October to its fastest pace in over two years, extending a period of resilience that supported the economy prior to a wave of stimulus measures aimed at bolstering 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, to Bloomberg. "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 instructed the nation's banks to lower the rates they pay for demand deposits from other financial institutions, a move designed to free up idle funds and stimulate the economy, according to sources familiar with the matter.

The yen strengthened in Asian trade after Atsushi Mimura, Japan's chief currency official, stated that authorities will take appropriate action against excessive currency moves. The currency had tumbled about 2% on Wednesday following Trump's victory.

Bloomberg's dollar index ticked lower in Asia after a 1.3% jump on Wednesday. Treasury 10-year yields dipped 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 on Wednesday, the lowest level recorded since 2009, based on data compiled by Bloomberg.