Asian stocks were mostly lower Tuesday as expectations of a U.S. rate hike boosted the dollar and investors watched for signs of policy direction from President-elect Donald Trump.
The Shanghai Composite Index lost 0.3 percent to 3,201.68 points and Tokyo’s Nikkei 225 was almost unchanged at 17,668.15. India’s Sensex fell 1.4 percent to 26,431.46 and Sydney’s S&P-ASX 200 retreated 0.3 percent to 5,326.20. Seoul’s Kospi shed 0.4 percent to 1,967.53. Hong Kong’s Hang Seng advanced 0.3 percent to 22,278.33 and benchmarks in New Zealand and Southeast Asia also rose.
Tech companies including Apple and Microsoft took big losses with the concern that the foreign response to Trump’s trade policies might hurt their sales in China and other global markets. Bank stocks surged as bond yields rose, which allows them to make more money from lending.
The Dow Jones industrial average gained 21.03 points, or 0.1 percent, to close at 18,868.69, another all-time high. The Standard & Poor’s 500 index dipped 0.25 points to 2,164.20 after it fell as much as 0.4 percent earlier. The Nasdaq composite sank 18.72 points, or 0.4 percent, to 5,218.40.
The dollar climbed as high as 108.37 yen from Monday’s 107.87 yen as expectations of a U.S. rate hike rose. Trump’s surprise election initially raised expectations that the Federal Reserve might put off a rate hike until his plans were clear. But analysts say the latest comments from Dallas Fed President Robert Kaplan indicate the Fed is sticking to plans to act in December. “There appears no stopping the U.S. dollar’s recent ascent based on the current interest rate trajectory,” Stephen Innes of OANDA said in a report.
Investors were watching for signs of what Trump, who gave few details of his plans on the campaign trail, might do in office. Analysts say his promises of tax cuts and higher infrastructure spending could boost economic growth but also spur inflation. His threats of sanctions against China and other trading partners that he accuses of acting unfairly have rattled trade-dependent Asian economies.
“Moving forward, the spotlight could shine on the contentious trade policy proposals that the president-elect had raised during his campaign,” said Jingyi Pan of IG in a report. “The latest soundbite from outgoing President Barack Obama seems to suggest that the incoming president is ‘ultimately pragmatic,'” said Pan. “It is without a doubt that emerging Asian markets would be negatively impacted should a trade war break out between US and China, although the delayed address could mean that the President-elect may indeed be more pragmatic than we have known.”
The euro was little-changed at $1.0750.
Benchmark U.S. crude gained 88 cents to $44.20 per barrel in electronic trading on the New York Mercantile Exchange. The contract shed 9 cents on Monday to close at $43.32. Brent crude, used to price international oils, rose 75 cents to $45.18 in London. It lost 32 cents on Monday to $44.43.