Asian stocks gained modestly on Tuesday, buoyed by Wall Street’s recovery and easing U.S. bond yields, while the dollar hovered near multi-month lows. Investors monitored President-elect Donald Trump’s cabinet appointments, scrutinizing their potential influence on Federal Reserve policy and global markets.
Technology stocks led the recovery, mirroring gains in the U.S., though markets were cautious ahead of Nvidia’s highly anticipated earnings report due Wednesday.
Japan’s Nikkei 225 rose 0.2% by mid-morning, while South Korea’s Kospi and Australia’s ASX 200 gained 0.1% each. Hong Kong’s Hang Seng Index climbed 0.8%, supported by strong performances in property and tech sectors, while mainland China’s blue-chip CSI 300 Index advanced 0.3%.
The recovery in Asian equities followed a global uptrend after a turbulent week on Wall Street, where concerns over rising bond yields and interest rates had triggered sharp sell-offs.
“Markets are taking a breather after last week’s volatility,” said Junichi Ishikawa, a strategist at IG Securities. “While investors remain cautious, the broader focus is on how Trump’s policies could reshape the economic and trade landscape.”
U.S. markets showed mixed signals. Futures for the S&P 500 Index edged slightly lower after the index gained 0.4% in the previous session. Investors remain cautious as Federal Reserve rate expectations continue to shift.
The probability of a quarter-point rate cut at the Fed’s December meeting has dropped to 59%, from 62% a day earlier and over 65% last week, according to CME’s FedWatch tool. This reflects resilience in U.S. economic data and concerns about potential inflationary pressures from Trump’s proposed fiscal policies.
Trump’s plans for increased fiscal spending, tariffs, and tighter immigration controls have been flagged by analysts as potentially inflationary. These factors could restrict the Fed’s ability to ease interest rates further.
Kyle Rodda, senior financial analyst at Capital.com, noted that, “With limited economic data, the focus is firmly on how Trump’s administration will impact fiscal policy, trade, and geopolitics. Simultaneously, markets are recalibrating expectations for Fed rate cuts.”
The U.S. bond market saw yields continue their decline, adding pressure on the dollar. The yield on the 10-year Treasury note dropped to 4.412%, while the 2-year yield slipped to 4.278%.
The U.S. dollar index was nearly flat at 106.20, close to Monday’s low of 106.12. The index had reached a one-year high of 107.07 last week. Against the Japanese yen, the dollar weakened by 0.35% to 154.165 yen but firmed slightly against the euro at $1.0591.
Bitcoin, which surged to a record $93,480 last week on optimism about potential favorable cryptocurrency regulations under Trump, remained stable at $90,960.
Safe-haven gold held steady at $2,614.80 per ounce after surging nearly 2% on Monday. Gold’s rally was fueled by a weakening dollar and escalating geopolitical tensions stemming from the Russia-Ukraine conflict.
Oil prices also rose as geopolitical concerns and supply disruptions continued to dominate. Brent crude futures were up 7 cents to $73.37 per barrel, while U.S. West Texas Intermediate crude gained 8 cents to reach $69.26 per barrel.
Adding to the bullish sentiment, Norway’s massive Johan Sverdrup oilfield remained offline due to a power outage, compounding fears of supply tightness.
Heightened tensions between the U.S. and Russia added a layer of uncertainty to global markets. In a pivotal shift, President Joe Biden’s administration authorized Ukraine to use U.S.-made weapons for strikes deep into Russian territory. This policy reversal drew sharp condemnation from the Kremlin.
Moscow described the move as reckless and warned it could escalate the conflict, increasing the risk of direct confrontation with NATO. Analysts fear that this geopolitical uncertainty could amplify volatility across financial markets.
President-elect Trump has begun announcing his cabinet, filling health and defense roles last week. However, key financial positions, including Treasury Secretary and U.S. Trade Representative, remain unfilled. These appointments are critical for markets seeking clues about the administration’s fiscal, monetary, and trade policies.
“The lack of clarity on Trump’s economic agenda is creating a vacuum for speculation,” said Ishikawa. “The market is waiting for concrete signals, especially in light of the Fed’s evolving policy stance.”
The next major market-moving event will likely be Nvidia’s earnings report on Wednesday, which could set the tone for the tech-heavy Nasdaq index. Additionally, Federal Reserve minutes scheduled for release later this week are expected to offer further insight into policymakers’ thinking on inflation and rate cuts.
