Asian currencies and stocks tumbled on Tuesday, as investors ditched risky assets worried about the potential fallout from a second term for Donald Trump as U.S. president, while the Thai baht fell on concerns about a new central bank chief.
The baht slid 0.8% to its lowest since mid-August. A Thai panel picked ruling party loyalist and former Finance Minister Kittiratt na Ranong to chair the bank's board, Reuters reported citing government sources.
"Kittiratt has been known as a critic of the central bank's hawkish stance, and the appointment comes to only highlight the government's determination to push the Bank of Thailand (BOT) to loosen policy further," Maybank analysts said in a note.
"We overall stay cautious on the pair and do not rule out further upside," they added, referring to the dollar-baht rate.
Among other currencies, the Malaysian ringgit retreated 0.5%, also to its lowest since mid-August, while the Indonesian rupiah fell 0.7%.
Among equities, stocks in Philippines shed 1.9% to hit their lowest since early September, while stocks in Shanghai declined 1.5%. Singapore equities fell 0.9%.
Investors are worried that the risk of tariffs, which Trump has vowed to increase by 10% on imports, and 60% on goods from China, will hurt the growth of Asian economies, especially those that depend on China as their top trading partner.
Prospects of looser regulation and equity-boosting tax cuts in the United States during Trump's presidency have also boosted the attractiveness of Wall Street assets and the greenback, putting pressure on Asian markets.
"I expect the U.S. dollar to continue to do well as upside risks continue to dominate in U.S. interest rates. These trends suggest emerging market rates and currencies will underperform," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
Taiwan shares retreated 2.3%, while stocks in South Korea declined 1.9%. Semiconductor stocks have been under pressure after a Reuters report that the U.S. told Taiwan Semiconductor Manufacturing Co to halt shipments to Chinese customers of advanced chips often used in AI applications.
Investors are now awaiting U.S. consumer price data on Wednesday to gauge the outlook of U.S. interest rates, with traders currently pricing in a roughly 65% chance of a cut in December, according to CME Group's FedWatch Tool.
Inflation data from India due later in the day and GDP data from Malaysia on Friday are also on investors' radar.
HIGHLIGHTS:
** Indonesian president starts U.S. visit with call to Trump ahead of Biden meeting
** India may relax spending limits to meet FY25 capex target, source says
** China's October new lending tumbles more than expected despite policy support - Reuters
