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Asian Markets Struggle as Bitcoin Soars to Record Highs on Trump-Inspired Optimism

Asian markets slide while bitcoin reaches record highs, fueled by investor enthusiasm following Donald Trump’s election win and pro-business policy expectations.

SINGAPORE (Reuters) - Asian markets saw a retreat on Tuesday, while the U.S. dollar held strong near a four-month high. However, the spotlight remained on bitcoin, which reached an unprecedented peak, fueled by investor expectations around pro-business policies from Donald Trump’s recent election victory. The performance of Asian markets reflects a blend of cautious optimism and sector-specific volatility.

Bitcoin surged to a new high of $89,637, a reflection of optimism as markets anticipate Trump’s policies to prioritize economic growth through business-friendly initiatives like tax cuts and deregulation. Investors are moving toward assets such as bitcoin that may benefit from these strategies, with Asian markets showing mixed reactions across sectors.

Bitcoin Reaches Record High Amid Trump-Inspired Optimism

The focus on bitcoin reflects a growing interest among investors seeking alternative assets. The cryptocurrency’s record-setting rise comes at a time when traditional markets, including Asian markets, are experiencing varied performances. Analysts predict that the momentum in bitcoin could drive the price toward $100,000 in the near future, particularly if pro-crypto candidates in Congress support favorable cryptocurrency policies.

In the foreign exchange markets, Trump’s proposed tariffs have already impacted the euro, which dropped to a seven-month low of $1.0687 overnight. As of Tuesday’s Asian session, the euro remained subdued, trading at $1.0658. Meanwhile, the U.S. dollar index climbed to 105.57, signaling confidence in a stronger dollar environment as the prospect of sustained higher U.S. interest rates makes dollar-denominated assets more attractive.

Expert Analysis: Vasu Menon, managing director of investment strategy at OCBC, commented, “Trump’s decisive win has eliminated uncertainties about a contested election, creating a positive short-term market sentiment.” However, Menon added that the long-term outlook remains uncertain, especially if aggressive trade tariffs are enacted. “Higher tariffs could spur inflation, eventually limiting the Federal Reserve’s flexibility on rate cuts,” Menon said. While optimism is high, there are concerns that protectionist trade measures could create new challenges for Asian markets.

Asian Markets React to Trump’s Victory

Despite the enthusiasm in the cryptocurrency sector, Asian markets showed varied performance:

• Asia-Pacific Stocks: MSCI’s index of Asia-Pacific shares outside Japan fell by 1%, led by Taiwan’s 2% decline and a 1% drop in South Korean shares. This decline followed recent U.S. restrictions that bar Taiwan Semiconductor Manufacturing Co. (TSMC) from shipping advanced chips to China, which has affected semiconductor stocks tied to AI applications.

• Japanese Markets: Japan’s Nikkei was a bright spot, rising 0.5% due to a weakening yen. The yen’s fall to three-month lows against the dollar bolstered exporter stocks in Japan, providing some relief amidst the overall market downturn.

In the U.S., the outlook remains buoyant as Trump’s win was well-received by Wall Street, pushing major indexes to record highs. Tesla shares, in particular, surged by nearly 9%, crossing the $1 trillion valuation mark. Market sentiment surrounding Tesla is partially attributed to CEO Elon Musk’s backing of Trump’s business-oriented policies, which investors believe could benefit U.S. companies that operate globally.

Mixed Reactions in Chinese Markets

Chinese stocks showed limited gains as investors reacted cautiously to Beijing’s recently announced economic stimulus package. Although the stimulus measures were aimed at providing financial support to key industries, investors were hoping for more direct consumer spending policies. Hong Kong’s stock market slid 1% as the stimulus fell short of expectations, leaving many investors disappointed. This mixed response is emblematic of the current atmosphere in Asian markets, where hopes for policy-driven growth have faced hurdles.

“China’s latest economic measures haven’t provided the direct boost we expected for consumer spending,” said a market strategist. “This has left sentiment somewhat subdued across Asian markets, with investors awaiting more concrete fiscal policies to support consumption directly.”

Key Economic Data and Events on the Horizon

This week, attention will also turn to the release of U.S. inflation data on Wednesday, which will shed light on consumer prices and potential Federal Reserve actions. Several prominent Federal Reserve officials, including Chair Jerome Powell, are scheduled to speak. Investors will closely follow Powell’s remarks on Thursday, especially as markets are currently pricing in an 87% likelihood of a 25-basis-point rate cut in December. This decision could impact asset flows into various markets depending on whether the Fed signals further monetary easing.

Commodities and Global Markets Update

Oil prices remained stable in early trading on Tuesday. Brent crude hovered around $71.88 per barrel, with West Texas Intermediate (WTI) just slightly up at $68.10 per barrel. The limited movement in oil prices reflects ongoing concerns about oversupply and cautious market sentiment following China’s economic package. In the precious metals market, spot gold remained steady at $2,624 per ounce after hitting a one-month low on Monday, a trend that Asian markets may keep an eye on as commodity prices impact various sectors.

Outlook for Investors Investors are assessing how Trump’s second term could reshape market trends. With renewed focus on infrastructure spending, deregulation, and pro-business tax policies, analysts believe these developments could sustain bullish sentiment across specific sectors, particularly in the U.S. However, potential trade tensions and tariff policies may introduce complexities in the global trading environment, which Asian markets are preparing for cautiously.

Final Thoughts

As investors digest Trump’s victory and the anticipated economic policies, the coming weeks will bring heightened attention to key economic indicators, particularly U.S. inflation and Federal Reserve policy shifts. Market dynamics will likely stay fluid as investors adjust to potential shifts in trade relations, interest rates, and currency valuations. This evolving environment underscores the importance of maintaining a diversified investment strategy to manage risks and capture potential gains across a range of assets, including stocks, cryptocurrencies, and commodities.