Foreign

Trump’s return shakes global markets, Asia starts year cautiously

Asian markets started the first full week of 2025 on a shaky note as traders struggled to track a healthy run-up on Wall Street, with minds turning to Donald Trump’s second presidency.

Concerns about China’s stuttering economy, the outlook for US interest rates and the wars in Ukraine and the Middle East were also causing a sense of uncertainty.

As Trump prepares to return to the White House on January 20, investors are steeling themselves for another four years of friction with China, particularly after he warned he would impose hefty tariffs on imports from the country and other key trade partners.

Those fears were being compounded by warnings that his pledges to cut taxes and remove regulations could reignite inflation, although there is hope such moves could boost profits.

The prospect of prices spiking again has caused traders to pare bets on how many rate cuts the Federal Reserve will make this year, with a hawkish pivot last month taking the wind out of the sails of an equity rally.

Richmond Fed boss Tom Barkin stoked worries that borrowing costs will remain elevated on Friday when he indicated his backing for a slower pace of reductions.

“I think there is more upside risk than downside risk,” he said. “So I put myself in the camp of wanting to stay restricted for longer.”

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