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Stocks Rise as Traders Mull Trump Victory, Fed: Markets Wrap

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(Bloomberg) — Asian stocks rose along with European and U.S. stock futures, as investors brace for a second Donald Trump presidency and an expected interest rate cut from the Federal Reserve.

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Chinese stocks were among the best performing stocks in Asia thanks to optimism that Beijing will introduce more stimulus measures, and encouraging export data. That was after the S&P 500 rose 2.5% on Wednesday, its best post-election day in history, and the Nasdaq 100 advanced 2.7%. The Federal Reserve is expected to cut its key interest rate by a quarter point on Thursday.

The rise in US stocks reflects expectations that Trump’s policy agenda favoring lower taxes and less regulation may support corporate profits. Meanwhile, 10-year Treasury yields rose 16 basis points on Wednesday on expectations that the president-elect’s fiscal plans and proposed tariff hikes will boost inflation and weaken the Fed’s ability to cut interest rates.

“After digesting Trump’s presidential win, investors in Asia are now focusing on China’s impending stimulus announcements,” said Frederic Neumann, chief Asia economist at HSBC Holdings Plc in Hong Kong. “Hopes are rising that China may unveil a major financial package in the coming days, providing a major boost to its battered economy.”

The yen strengthened after Atsushi Mimura, Japan’s top currency official, said authorities would take appropriate measures against excessive currency movements. The currency fell about 2 percent on Wednesday as the dollar rose after Trump’s victory.

The Bloomberg Dollar Index in Asia fell after jumping about 1.3% on Wednesday. 10-year Treasury yields fell one basis point to 4.43%.

China’s CSI 300 index rose more than 2% after falling in early trading. Consumer and real estate stocks rose as traders bet that Beijing will shift its focus toward boosting domestic demand to offset any negative impact from Trump’s return to the White House.

Chinese export growth rose in October at the fastest pace in more than two years, continuing months of resilience that helped sustain the economy ahead of a barrage of stimulus measures aimed at supporting domestic demand.

“It is very likely that we will see further fiscal and monetary stimulus from Beijing, which could offset some of the trade headwinds,” said David Chow, global market strategist at Invesco in Singapore. “All eyes are on what might emerge from China’s policy toolkit after the conclusion of the Standing Committee meeting of the National People’s Congress on November 8.”

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