Asia stocks muted as Trump rally cools; Fed, China stimulus in focus

Most Asian stocks moved in a flat-to-low range on Thursday as a rally on the back of Donald Trump winning the 2024 U.S. election now cooled, with focus turning to more stimulus measures in China and an upcoming Federal Reserve meeting. 

While most Asian markets rose sharply on Wednesday, Chinese stocks lagged on the prospect of stricter trade tariffs against the country. 

A meeting of China’s National People’s Congress, which began earlier this week, is now in focus for more cues on fiscal stimulus. 

Regional markets took limited positive cues from a stellar overnight session on Wall Street, as U.S. benchmark indexes shot up to record highs after Trump’s victory. 

U.S. stock index futures steadied in Asian trade, with investors looking to the conclusion of a Fed meeting later on Thursday for more cues on interest rates.

The Fed is widely expected to cut interest rates by 25 basis points . But its outlook on rates remains uncertain in the face of a Trump presidency and recent stickiness in inflation.  Chinese stocks drift higher, NPC meeting in focus 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.4% each, while Hong Kong’s Hang Seng index added nearly 1%, recovering from mild losses made on Wednesday.

Chinese markets have so far remained resilient despite the implications of a Trump presidency, given that Trump has vowed to impose a 60% trade tariff on all Chinese imports.

Beijing congratulated Trump on the victory, while the president-elect also reportedly spoke with Chinese Premier Xi Jinping over the phone. 

Focus this week is squarely on the NPC meeting, where Beijing is widely expected to outline plans for more fiscal spending to support the economy. An announcement is expected to be made at the conclusion of the meeting on Friday.

Before that, Chinese trade data is due later on Thursday. Japanese stocks buoyed by weaker yen

Japan’s Nikkei 225 index fell 0.3% after surging 2.6% in the prior session. The TOPIX index rose 0.8% on Thursday, with sentiment towards Japanese stocks remaining generally upbeat on a sharp drop in the yen on Wednesday.

The yen was battered by a stronger dollar, with the Japanese currency hitting its weakest level in three months as the greenback surged. Markets expect a wide interest rate differential between Japan and the U.S. to persist under a Trump presidency. 

Weakness in the yen helped export-oriented stocks gain, with automaking giant Toyota Motor (NYSE:TM ) Corp (TYO:7203 ) surging over 4% even as it clocked underwhelming earnings for the September quarter.

Peer Honda (NYSE:HMC ) Motor Co Ltd (TYO:7267 ) fell 0.2%, as it warned of weakening Chinese sales and a potential impact from any increased U.S. trade tariffs. 

Broader Asian markets moved in a flat-to-low range, as initial optimism over a Trump victory cooled.

Australia’s ASX 200 fell 0.2% as data showed the country’s trade balance hit its weakest level in four years in September, amid weak commodity demand in top trading partner China.

South Korea’s KOSPI fell 0.2%, while futures for India’s Nifty 50 index pointed to a muted open, after the index rebounded sharply from four-month lows this week.

Source: Investing.com