Asian markets drop as trades fret over US inflation, rates outlook

AFP, Hong Kong :

Asian markets struggled Thursday after a tepid lead from Wall Street, with investors growing increasingly worried about the outlook for inflation and US interest rates as Donald Trump’s second presidency looms.
A report saying the president-elect was considering declaring a national economic emergency to provide legal cover to impose tariffs on all imported goods added to the sense of uncertainty on trading floors.
Sentiment was also clouded by data showing that Chinese consumer inflation remained almost non-existent despite a raft of stimulus measures in the final three months of last year.
Equities have had an unremarkable start to 2025 after the Federal Reserve in December made a hawkish pivot and indicated it would not cut rates as much as initially expected over the next 12 months owing to sticky inflation and a still-strong labour market.
Worries about Trump’s plans to slash taxes, regulate immigration and ramp up tariffs have also led to warnings that prices could reignite.
That has sent yield on the 10-year US Treasury note surging and fanned speculation it could top five percent for the first time since October 2023.
Friday’s US employment figures are now well in focus for trade, with markets in New York closed Thursday to mourn former US president Jimmy Carter.
Forecast-topping data on job openings and prices paid by services firms compounded traders’ concerns, while analysts said there was unease among investors about Trump’s unpredictable governing style, particularly with him not having to face another presidential election.
After fluctuating through the day, the Dow and S&P 500 ended slightly higher on Wall Street but the Nasdaq dipped.
In early trade, Hong Kong edged up while Shanghai fell as investors assessed data showing Chinese inflation eased in December, and officials face calls to ramp up stimulus to boost consumption.