Asia wrap: Asia markets bounce

Asia's markets are riding a wave of optimism, catching a significant tailwind from Wall Street's record-setting day on Friday and buoyed further by emerging signs that China's economic funk might be easing. Recent data, including the latest purchasing managers' index figures, suggest that the world's second-largest economy might be rounding a corner after a protracted slowdown. The not-so-secret sauce is a series of support measures introduced at the end of September that triggered a much-needed multiplier effect—suggesting, at minimum, that we could see a smoother baton handover to Europe despite building economic and political storm clouds.

The last two months of PMI data have revealed early indications of economic revival following Beijing's policy shift and subsequent stimulus initiatives.

The real mood booster, however, is the increasing speculation that China will further loosen its monetary policy. This sentiment was evident as China’s 10-year yield plunged below the critical 2% mark, hitting a record low, amid heightened bets by traders that authorities will implement additional easing measures to support the faltering economy ahead of President-elect Trump tariff barrage.

Over the weekend, the global financial landscape quivered as President-elect Donald Trump launched a formidable tariff threat against the BRICS nations should they dare to dethrone the US dollar. On his Truth Social platform, Trump declared an ultimatum: the BRICS must not pursue a new currency or endorse an alternative to the "mighty US Dollar," or face crippling 100% tariffs. Although discussions at the recent BRICS summit in Kazan focused on enhancing local currency settlements, the spectre of a unified BRICS currency loomed large without concrete plans. Trump's bombastic tariff threat, targeting countries representing a staggering 37% of the global GDP, might set the stage for a new era of aggressive trade diplomacy in his forthcoming administration.

Since the onset of Trump 2.0 and his barrage of tariff threats, the currency markets have consistently felt the brunt of the impact, and today has been no exception.