Asian stocks eased on Tuesday, while the U.S. dollar held steady at a four-month high, as market attention shifted to the soaring cryptocurrency Bitcoin, which reached an all-time peak. Bitcoin surged to $89,637, fueled by investor optimism surrounding policies expected from Donald Trump’s second term in office, including tax cuts and deregulation that could benefit equities and digital assets.
The excitement around Bitcoin overshadowed broader market movements, as investors bet on a pro-growth agenda under Trump, which is expected to boost U.S. stocks and strengthen the dollar. Trump’s anticipated policies have raised expectations that U.S. interest rates will remain relatively higher for longer, further supporting the greenback.
The U.S. dollar index, which measures the currency against a basket of six major peers, was at 105.57, just shy of Monday’s four-month high. Meanwhile, the euro struggled, falling to near seven-month lows of $1.0687, as concerns over potential tariffs from the Trump administration weighed on the single currency. The euro last traded at $1.0658 during Asian hours.
Vasu Menon, managing director of investment strategy at OCBC, noted that Trump’s decisive victory and the projected Republican control of both chambers of Congress had removed uncertainties around the U.S. election outcome. However, he warned that Trump’s aggressive trade policies could eventually lead to inflation and prevent the Federal Reserve from cutting rates. “Tariffs also carry the risk of retaliation from major trading partners,” Menon said, though he added that for now, Trump’s victory had unleashed investor optimism, or the “animal spirit,” in markets.
While Asian stocks generally faced downward pressure, with MSCI’s broadest index of Asia-Pacific shares outside Japan dropping 1%, Japan’s Nikkei index bucked the trend, rising 0.5%, driven by a weak yen. The yen hovered near a more than three-month low at 153.93 per dollar, offering support to Japanese exporters.
In particular, semiconductor stocks in Asia were under pressure after reports that the U.S. had ordered Taiwan Semiconductor Manufacturing Co (TSMC) to halt shipments of advanced chips to China, a move that could disrupt key AI applications.
Despite the downturn in the broader Asian market, U.S. stocks surged overnight, with Wall Street’s main indexes reaching record highs. Tesla, which gained about 9%, helped lead the charge after the company’s market value touched $1 trillion, as investors anticipated that CEO Elon Musk’s backing of Trump would benefit the automaker.
As markets await more clarity on Trump’s policy agenda, attention remains fixed on Bitcoin’s record-breaking rally and the ongoing strength of the U.S. dollar. While short-term market sentiment is bullish, concerns about trade tensions and inflation could cloud the medium-term outlook.
