Stocks wobble, dollar lower as focus on tariffs

Stocks in Asia saw a muted open in the previous session after Donald Trump’s tariff plan rattled emerging markets.

Equities opened higher in Sydney, while Tokyo and Seoul dipped. US equity futures were little changed after the S&P 500 rose for a seventh day, posting its 52nd record high this year. A Bloomberg gauge of the dollar slipped 0.1%, paring some of its strength seen on Tuesday that pressured the Mexican peso and the Chinese yuan, among others.

Trump’s tariff plan looked set to gain further momentum on Wednesday, the president-elect’s transition team said as it prepared for the announcement of Jamieson Greer as US trade representative. A longtime protégé of Robert Lighthizer, the choice highlights the central role of tariffs in the new administration’s economic agenda.

Neil Thomas, fellow on Chinese politics at the Asia Society Policy Institute Center, said China is “likely to respond cautiously to Trump’s threats at first, until it better understands the balance between confrontation and deal-making in his second term.” For China analysis.

Middle East tensions eased slightly as President Joe Biden said Israel had reached a ceasefire agreement with the Lebanese militant group Hezbollah after weeks of US-brokered talks. While anticipation of the announcement sent oil lower on Tuesday, crude was little changed early on Wednesday after an industry report showed a decline in US stockpiles and traders turned their attention to an OPEC meeting this weekend.

In Asia, key events include inflation in Australia and the central bank’s decision in New Zealand, where a rate cut of 50 basis points is expected.

U.S. stocks rose on Tuesday, while the bond market’s response was subdued after its second-biggest advance of the year. Federal Reserve officials indicated support for a cautious approach to rate cuts, according to minutes of their latest policy meeting. The US 10-year yield rose three basis points to 4.31%.

That captures a bearish tone in the market for interest-rate options, suggesting traders are bracing for a renewed rise in Treasury yields in the coming weeks. The wagers are a reminder that even though yields may have surrendered their post-election advance, investors are well aware of the so-called Trump trade’s potential to regain traction.