Morning Bid: Trump-fueled records without momentum, or bonds

By Alden Bentley

A look at the day ahead in Asian markets. 

The Trump trade carried Wall Street to fresh records on Monday but election-week momentum faded in holiday thinned markets that don’t leave Asia much to cue off aside from disappointment in China’s stimulus proposals.

Except, perhaps, in the cryptosphere, where Donald Trump’s sweeping win over Democratic candidate Vice President Kamala Harris kept activity lively, thanks to the president-elect’s pre-election bitcoin cheerleading.

The largest digital currency soared above $85,000 for the first time, carrying associated shares along with it. 

Treasury markets, being closed for the U.S. Veterans Day holiday, offered no signals.

Fed funds futures however showed traders see a 65% chance that the Fed will follow last week’s quarter point cut with another at its Dec. 17-18 meeting, even as easing expectations for next year were dialed back.

The three main U.S. indexes climbed further into uncharted territory in early trading, although the benchmark S&P 500 had difficulty holding above the 6,000 threshold that it first traded above on Friday.     

The stock market loves the Trump proposals for tax cuts and deregulation, especially the Russell 2000 small cap index, which rose about 1.5% to within 1% of the record high from November 2021. 

Bonds have been less enamored of Trump’s promise to impose import tariffs that many economists see as likely to raise inflation and kick off retaliation from trade partners.

The 30-year Treasury yield hit its highest since the end of May last week after the election, while the yield on the 10-year note rose to its highest since early July and the two-year hit its highest since late July. 

The dollar was still buoyed by higher yields, rising against the yuan to its highest since early August at 7.2332 yuan. Dollar/yen rose 0.7% to 153.78.

Several stocks that gained following the election continued their upward trajectory. Tesla (NASDAQ:TSLA) jumped almost 8% after touching $1 trillion in market value on Friday for the first time since 2022. Elon Musk, Tesla’s billionaire CEO, has close ties to Trump and his companies look positioned to benefit under the new administration. 

U.S. listed cryptocurrency stocks surged, with crypto exchange Coinbase Global (NASDAQ:COIN) jumping more than 20% and iShares Bitcoin Trust up more than 13%. Crypto miner Riot Platforms (NASDAQ:RIOT) surged 17%, while MicroStrategy, one of bitcoin’s biggest corporate backers, gained 28%.

Beijing’s proposed 10 trillion yuan ($1.4 trillion) package to shore up local government financing, announced late on Friday, did not offer a direct boost to its flagging economy. Thus investor disappointment overshadowed the record run Wall Street closed out with last week. 

MSCI’s broadest index of Asia-Pacific shares outside Japan closed down 1% on Monday after Hong Kong’s Hang Seng sank 1.45%. Chinese blue chips rose 0.66% higher after an early fall and Tokyo’s Nikkei ended 0.08% higher.

Here are key developments that could provide more direction to markets on Tuesday:

– India CPI (Oct)

– India Industrial output (Sept)

– South Korea Unemployment (Oct)