Asian stocks rose along with European and American equity index futures as investors prepared for Donald Trump's second term as president and anticipated rate cuts by the Federal Reserve.
Boosted by optimism over more stimulus measures from China and encouraging export data, Chinese stocks performed best in Asia. Previously, the S&P 500 index surged 2.5% on Wednesday, November 6th, marking its best post-election performance in history, while the Nasdaq 100 index rose 2.7%. The market expects the Federal Reserve to cut key rates by a quarter point on Thursday.
The rise in the US stock market reflects expectations that Trump's tax cuts and deregulation policies may support corporate profit forecasts. Meanwhile, the US 10-year Treasury yield surged 16 basis points on Wednesday as people anticipate the president-elect's fiscal plans and tax proposals to raise inflation, weakening the Fed's ability to lower rates.
Decision by the Federal Reserve
It is widely expected that Fed officials will cut the benchmark rate by 25 basis points at the end of the two-day meeting, following a half-point cut in September. Based on the median estimate released in September, Fed officials expect another quarter-point cut in December this year, and a full one-point cut in 2025.
"What investors really want to know is: how will President-elect Donald Trump's fiscal and tariff policies affect the rate outlook of the Federal Open Market Committee," wrote Bloomberg economist Anna Wong in a research report. "Participants of the Federal Open Market Committee may be working hard to address this issue."
Wall Street's "fear index" - the VIX - saw its largest drop since August on Wednesday. Trading volume on US exchanges was nearly 19 billion shares, 63% higher than the daily average volume of the past three months.
Bitcoin embraced digital assets during the election campaign, with many viewing it as the so-called Trump trade. Bitcoin fell on Thursday after hitting a new all-time high the day before. Crude oil prices rose on Wednesday after experiencing roller-coaster fluctuations as traders weighed the potential impact of Trump's election victory on the oil market.
Main events this week
China trade, forex reserves, Thursday
Bank of England interest rate decision, Thursday
Fed interest rate decision, Thursday
University of Michigan Consumer Confidence Index, Friday
Main market trends
Stocks
Japan Tokyo Stock Exchange Index rose by 1%
Hong Kong Hang Seng Index rose by 1.5%.
Shanghai Composite Index rose by 2.3%.
Euro Stoxx 50 futures rose by 0.4%.
Currency
Bloomberg Dollar Spot Index fell by 0.2%.
Euro rose by 0.2% to 1.074 dollars.
Japanese Yen rose by 0.4% to 154.05 against the US dollar.
Offshore Chinese Yuan rose by 0.2% to 7.1898 against the US dollar.
Cryptos
Bitcoin fell by 1.9% to $74,522.99.
Ethereum rose by 3.7% to $2,788.33.
Bonds
The 10-year US Treasury yield remained almost unchanged at 4.43%.
The 10-year Japanese government bond yield rose by 2.5 basis points to 1.005%.
The 10-year Australian government bond yield rose by 1 basis point to 4.64%.
commodity equity index
West Texas Intermediate crude oil rose 0.2% to $71.86 per barrel.
Spot gold fell 0.1% to $2,655.93 per ounce
