TOKYO (AP) — Asian shares mostly declined on Tuesday as worries spread over President-elect Donald Trump’s comment that he plans to impose sweeping new tariffs on Mexico, Canada and China as soon as he takes office.
Japan’s benchmark Nikkei 225 dropped 0.9% to 38,442.00. Australia’s S&P/ASX 200 lost 0.7% to 8,359.40. South Korea’s Kospi dipped 0.6% to 2,520.36. Hong Kong’s Hang Seng was little changed, inching up less than 0.1% to 19,158.76, while the Shanghai Composite gained 0.1% to 3,261.12.
On Monday, stocks rose on Wall Street, with companies likely to benefit the most from lower interest rates and a stronger economy leading the way. The S&P 500 climbed 0.3% to 5,987.37, pulling closer to its all-time high set two weeks ago. The Dow Jones Industrial Average added 1% to its own record set on Friday, closing at 44,736.57, while the Nasdaq composite rose 0.3% to 19,054.84.
Treasury yields eased in what some analysts called a “Bessent bounce” after Trump said he wants Scott Bessent, a hedge fund manager, to be his Treasury Secretary.
Bessent has argued for reducing the U.S. government’s deficit, which is how much more it spends than it takes in through taxes and other revenue. Such an approach could soothe worries on Wall Street that Trump’s policies may lead to a much bigger deficit, which in turn would put upward pressure on Treasury yields and drive prices lower.
After climbing above 4.44% immediately after Trump’s election, the yield on the 10-year Treasury fell back to 4.26% Monday, down from 4.41% late Friday. That’s a notable move, and lower yields make it cheaper for all kinds of companies and households to borrow money. They also give a boost to prices for stocks and other investments.
The Russell 2000 index of smaller stocks jumped 1.5%. It finished just shy of its all-time high, which was set three years ago. Smaller companies can feel bigger boosts from lower borrowing costs because of the need for many to borrow to grow.
The two-year Treasury yield, which more closely tracks the market’s expectations for what the Federal Reserve will do with overnight interest rates, also eased sharply.
The Fed began cutting its main interest rate just a couple months ago from a two-decade high, hoping to keep the job market humming after bringing inflation nearly all the way down to its 2% target. But immediately after Trump’s victory, traders had reduced bets for how many cuts the Fed may deliver next year. They were worried Trump’s preference for lower tax rates and higher spending on the border would balloon the national debt.
Read More: Asian shares mostly fall on worries about Trump’s tariffs
