European equity futures and US stock futures slipped on Wednesday as investors grappled with inflation concerns stemming from President-elect Donald Trump’s proposed tariffs and Cabinet selections. Japan and Hong Kong stock indices also retreated, with Asian shares reaching their lowest level since mid-September. The yen weakened past 155 per dollar, sparking speculation that Japan may intervene to curb further depreciation.
The Bloomberg Dollar Spot Index inched up along with Treasury yields, as traders anticipate a US consumer-price report. Markets now expect two rate cuts by June, down from nearly four predicted a week ago.
The cautious sentiment across Asia stems from expectations that Trump’s policies may drive inflation up, slowing potential rate cuts. The president-elect’s “America First” approach, with China-focused officials in his administration, is also amplifying trade tensions. “The tilt toward tariff fears is starting to overpower expectations of tax cuts,” noted Charu Chanana, chief investment strategist at Saxo Markets.
Trump’s victory has pressured global markets, with an MSCI index for non-US equities capping its worst day since August. Developing-market currencies are also weakening, with a near 1% drop. China, responding to yuan depreciation fears, adjusted its daily currency fix higher than market expectations amid tariff concerns.
Bitcoin’s recent rally cooled as the digital asset dipped from near $90,000. In the corporate realm, Japan’s Seven & i Holdings is exploring a potential management buyout valued at around $58 billion. In commodities, oil remained near its monthly lows as OPEC revised demand projections amid China’s slowdown, while gold edged slightly higher.