U
S Markets Post Losses as Tariff Fears Weigh on Sentiment
The Dow ended a five-day winning streak on Wednesday, November 27, with the Nasdaq Composite Index falling 0.60% and the S&P 500 declining by 0.38%. Despite upbeat US economic indicators signaling a robust economy ahead of the Thanksgiving holiday, pre-holiday profit-taking dampened market sentiment.
The US Personal Income and Outlays Report showed sticky inflation, with the Core PCE Price Index rising 2.8% year-on-year in October. Tight labor market data pointed to higher consumer spending and inflation pressures. However, the CME FedWatch Tool suggested rising bets on a December Fed rate cut, which failed to boost demand for riskier assets.
President-elect Trump's tariff threats targeting Canada, China, and Mexico continued to weigh on market sentiment. Natixis Asia Pacific Chief Economist Alicia Garcia Herrero warned that Trump's decoupling plans could be even more negative than tariffs, potentially impacting economic growth and corporate earnings.
Asian markets were affected by US tariff woes, with the Hang Seng Index dropping 1.08% on Thursday morning. The real estate and tech sectors contributed to the losses, while mainland China's equity markets partially reversed gains from Wednesday.
In contrast, Japan's Nikkei Index advanced 0.38% on Thursday morning, driven by increasing bets on a December Fed rate cut. Tech stocks Tokyo Electron and Softbank Group Corp. saw significant gains.
The Australian market defied Wall Street losses, with the ASX 200 Index gaining 0.68% to strike a new all-time high of 8,466. Banking and tech-related stocks contributed to the morning gains, countering a pullback in gold stocks.
Investors should monitor developments in Beijing's stimulus measures, central bank commentary, and US trade policy to navigate evolving market risks. Further stimulus targeting Chinese consumers could mitigate tariff concerns, while increasing Bank of Japan rate cut expectations may drive Yen demand and impact Nikkei-listed exporters.
