SHANGHAI (Reuters) - The yuan fell against the U.S. dollar to its weakest in nearly four months after U.S. President-elect Donald Trump said he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China.

Offshore yuan dropped roughly 0.3% on the news to 7.2730 per dollar, its lowest since July 30, while onshore yuan also fell after the market opening.

"The directional impact is clear for the yuan – weaker – but Chinese authorities will be nervous about devaluing too much and encouraging outflows," said Ben Bennett, head of investment strategy for Asia at LGIM.

Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1910 per dollar, which was 450 pips firmer than the Reuters' estimate.

The effectiveness of the fixing as a tool to manage yuan depreciation expectations is limited, said analysts at Nomura in a note.

"We believe that, if onshore spot USD/CNY rises above the 7.30 level, market activity will shift where USD demand strengthens versus sellers," the Nomura analysts said, adding that this will present a challenge to authorities if they don't allow the yuan fixing to get weaker.

Nomura suggested to go long dollar against the offshore yuan.

The spot yuan opened at 7.2524 per dollar and was last trading 105 pips lower than the previous late session close at 7.2553 as of 0239 GMT.

Actual tariff announcements and negotiations will drive the yuan in coming quarters, said Liang Ding, an analyst at research firm Macro (BCBA:BMAm) Hive.

"Given the 'promise made, promise kept' rhetoric of the Trump campaign, markets may begin to price in additional risk premia related to the second trade war as Trump’s inauguration approaches," Ding said.

During Trump's first term as president, the yuan weakened about 5% against the dollar after the initial round of U.S. tariffs on Chinese goods in 2018, and fell another 1.5% a year later when trade tensions escalated.

As part of his pitch to boost American manufacturing during the recent election campaign, Trump said he would impose tariffs of 60% or more on goods from China.

The proposed tariffs, as well as other policies such as tax cuts, are seen as inflationary and likely to keep U.S. interest rates relatively high, hurting currencies of U.S. trading partners.

The dollar's six-currency index was 0.075% lower at 107.27.

LEVELS AT 02:39 GMT

INSTRUMENT CURRENT UP/DOWN( % DAY'S DAY'S 

vs USD -) VS. CHANGE HIGH LOW

PREVIOUS YR-TO-

CLOSE % DATE

Spot yuan 7.2553  -0.21 -2.12 7.2466 7.2568

Offshore 7.2629  -0.24 -1.91 7.2518 7.273

yuan spot

Investing.com-- U.S. stock index futures fell on Monday evening after President-elect Donald Trump threatened to impose higher import tariffs on China, Canada and Mexico on concerns over illegal drugs and immigration.

S&P 500 Futures fell 0.3% to 5,989.75  points, while Nasdaq 100 Futures fell 0.3% to 20,817.75 points by 19:03 ET (00:03 GMT). Dow Jones Futures fell 0.3% to 44,707.0 points. 

Futures reversed initial gains after Trump’s threat, which cut short momentum from a positive session on Wall Street. U.S. stock benchmarks hit record highs on Monday as investors cheered the nomination of Scott Bessent as Treasury Secretary, while flows into cyclical sectors persisted.

Risk appetite was also supported by reports that a ceasefire between Israel and Lebanon was close, which saw oil prices fall sharply. 

Trump threatens more tariffs 

Trump said in a social media post that he will impose an additional 10% tariff on all Chinese imports, citing a lack of progress on China’s part towards curbing the flow of illegal drugs into the U.S.

His threat follows promises during his campaign that he will impose a 60% tariff on all Chinese goods.

Additionally, Trump also said he will impose a 25% tariff on all imports from Canada and Mexico over inflows of allegedly illegal immigrants and drugs into the U.S. through open borders with the two countries.

Trump’s tariff threats ramped up concerns over a renewed global trade war between the world’s biggest economies- a trend seen through much of his first term. Such a scenario bodes poorly for global trade, especially for countries with heavy trade exposure to the U.S.

The dollar and Treasury yields surged on Trump’s tariff threats. 

Wall St hits record highs on Treasury nomination 

Losses in Wall Street futures came after a positive session on Monday, after Trump’s nomination of Bessent was welcomed by investors.

Bessent- a seasoned investor- is expected to push for more tax reforms for U.S. firms, and is also expected to have a more moderate view on trade tariffs. 

Wall Street was also buoyed by a steady pivot into economically sensitive sectors, as markets bet on more expansionary policies under a Trump administration.

The Dow Jones Industrial Average was an outperformer among its peers, rising 1% to a record high of 44,746.57 points on Monday. The S&P 500 rose 0.3% to 5,987.37 points, while the NASDAQ Composite rose 0.3% to 19,054.89 points. 

Trading volumes are expected to be muted this week, on account of the Thanksgiving holiday. 

But focus is also on key upcoming economic data, with PCE price index data- the Federal Reserve’s preferred inflation gauge- due on Wednesday. 

Investing.com-- President-elect Donald Trump said on Monday that he will impose an additional 10% tariff on all Chinese imports to the U.S. to pressure Beijing into curbing the flow of illegal drugs into the country.

Trump said in a post on Truth.social that he had held numerous talks with Chinese officials over curbing the supply of drugs, particularly fentanyl, to the U.S. 

But he claimed that such talks had not yielded any results, and that “drugs were still pouring into our country, mostly through Mexico, at levels never seen before.”

“Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America,” Trump said. 

Trump had threatened to impose an up to 60% tariff on all Chinese goods, a move that could potentially spark a renewed trade war between the world’s biggest economies.

Trump threatens tariffs on Canada, Mexico over immigration

Trump also said on Monday that he will impose a 25% tariff on all imports from Canada and Mexico, citing concerns over allegedly illegal immigrants coming into the U.S. through the countries. 

Trump said he will impose the tariffs “as one of my many first executive orders” when he takes office on January 20.

“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” Trump said in a Truth.Social post.

The President-elect had campaigned on promises of protectionist policies towards trade and immigration- carrying over his rhetoric from his first term, which had seen increased U.S. import tariffs on several trading partners.

(Reuters) -Lawmakers in the U.S. House of Representatives have asked Treasury Secretary Janet Yellen to rethink ties with Hong Kong's banking sector, saying the city has become a top location for money laundering and sanctions evasion.

Hong Kong has turned into a hub for many violations of U.S. trade controls, including export of controlled Western technology to Russia and the creation of front companies to buy Iranian oil, the bipartisan leaders of the House of Representatives Select Committee on the Chinese Communist Party said in a letter to Yellen.

The letter, scheduled to be publicly released on Monday, said that Hong Kong has shifted from being a trusted global financial center to a critical player in the deepening authoritarian axis of China, Iran, Russia and North Korea.

"We must now question whether longstanding U.S. policy towards Hong Kong, particularly towards its financial and banking sector, is appropriate," a copy of the letter seen by Reuters said.

The letter, signed by Republican John Moolenaar, who chairs the committee, and Raja Krishnamoorthi, the committee's ranking Democrat, cited research that shows nearly 40% of goods shipped from Hong Kong to Russia in 2023 were high-priority items such as semiconductors that Russia could use to prosecute its war in Ukraine.

The U.S. Treasury Department did not immediately respond to Reuters' requests for comments. Hong Kong's trade office in New York could not be immediately reached for comment

Investing.com-- Chinese electric vehicle (EV) stocks rose in Hong Kong trade on Monday after media reports stated that China and the European Union were close to reaching a solution on eliminating tariffs on imports into the bloc.

Brussels and Beijing are nearing a solution on tariffs on Chinese electric vehicle imports into the bloc, Bernd Lange, chair of the trade committee of the European Parliament, told a German broadcaster.

"We are close to an agreement: China could commit to offering e-cars in the EU at a minimum price," Bernd Lange told n-tv, without elaborating. "This would eliminate the distortion of competition through unfair subsidies, which is why the tariffs were originally introduced," Reuters had reported last week.

Shares of Hong Kong-listed NIO Inc (HK:9866) were nearly 4% higher, while Geely Automobile Holdings Ltd (HK:0175) shares rose 1.7%.

Li Auto (NASDAQ:LI) (HK:2015) shares rose 1.4%, while BAIC Motor Corp Ltd (HK:1958) and BYD Co (SZ:002594) (HK:1211) were up 0.9% and 0.4%, respectively.

The European Union had earlier this year hiked import tariffs on Chinese-made electric vehicles by up to 45.3% in a high-profile trade investigation, a decision that drew ire from Beijing.

China's Chamber of Commerce to the EU at the time expressed profound disappointment with the "protectionist" and "arbitrary" measure.

Although neither the European Commission nor China’s Ministry of Commerce has officially commented on Lange’s remarks, progress in the discussions has been reported.

Lange’s comments came just days after Chinese President Xi Jinping and German Chancellor Olaf Scholz discussed the issue during the G20 summit in Rio de Janeiro. Xi emphasized that tariffs on Chinese EVs are a global concern and reiterated China’s commitment to resolving the issue through dialogue.

The EU has indicated that the discussions have yielded technical progress, but the details of the agreement remain under wraps, according to media reports.

Investing.com-- Most Asian stocks rose on Monday as investors piled into cyclical stocks heading into the last week of November, while focus turned to a slew of upcoming economic readings,  including China’s industrial data and India’s third-quarter GDP.

Sentiment was also buoyed by U.S. President-elect Donald Trump's nomination of prominent investor Scott Bessent as Treasury Secretary, with Bessent seen holding a much more moderate view on trade tariffs.

Regional markets tracked Friday's gains on Wall Street, where demand for economically sensitive sectors saw the Dow Jones Industrial Average close at a new high, and S&P 500 mark its fifth winning day in a row.

U.S. stock index futures rose in Asian trade, tracking optimism over Bessent's appointment. Bond yields also fell after his appointment, lending stocks more space to rise. 

Investors shrugged off risk worries induced by heightened tensions between Russia and Ukraine. Moscow launched an advanced hypersonic missile on a Ukrainian facility last week and threatened nuclear retaliation for Kyiv’s use of Western-made, long-range missiles.

Japan’s Nikkei 225 index added 1.2%, while the TOPIX rose 1%. Both indexes logged weekly losses last week.

South Korea’s KOSPI rose 1.4%, while Indonesian shares, specifically the Jakarta Stock Exchange Composite Index jumped 1.7%.

Bucking the trend, China's Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were down 0.6% and 0.4%, respectively. Hong Kong’s Hang Seng index shed 0.4%.

Futures for India’s Nifty 50 index pointed to strong open. Reuters reported that Adani dollar bond prices fell to almost one-year lows on Monday as investors cut their exposure to the Indian conglomerate in the wake of bribery and fraud allegations from U.S. authorities.

Econ. data barrage on tap this week

Singapore is scheduled to release its inflation figures for October later in the day. Economists polled by Reuters expect the headline inflation rate of 1.8%, down from the 2% in the previous month.

South Korea's central bank is set to decide on  interest rates on Wednesday, while November inflation numbers from Japan’s capital city of Tokyo will be released on Friday. 

India is set to release its third-quarter GDP report on Friday, while China will release purchasing managers index data on Saturday. Before that, industrial profit data from China is due on Wednesday.

In the U.S., the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures (PCE) price index, is to be released on November 27.

Australian shares hit record high

Australia's ASX 200 hit an all-time-high of 8452.1 points with a 0.7% rise on Monday, helped by gains in cyclical stocks such as banks and miners. The trade was underpinned by a global push into economically sensitive sectors, as investors bet on more expansionary policies under a Trump administration in the U.S..

In corporate news, Australia’s largest vehicle fleet management and leasing group SG Fleet Group Ltd (ASX:SGF) jumped as much as 24% after it confirmed that it is in discussions regarding a A$1.2 billion ($785 million) buyout offer from private equity group Pacific Equity Partners (PEP)

Australian inflation readings for October are also scheduled to be out on Wednesday.

Investing.com -- J.P. Morgan’s 2025 U.S. economic outlook outlines two potential paths for the nation’s economy, hinging on the policy environment set by the recently elected administration. 

Analysts emphasize that these paths reflect a tension between stimulus-oriented policy changes and the uncertainty surrounding trade and regulation. 

The note flags key economic indicators and forecasts for the year ahead, including GDP growth, unemployment trends, inflation dynamics, and fiscal and monetary policy implications.

J.P. Morgan argues that the recent election, which brought a red-wave administration to power, introduces a dual narrative for 2025. 

On one hand, tax cuts and deregulation could invigorate business confidence and productivity, potentially boosting GDP growth while keeping inflation manageable. 

On the other, heightened policy uncertainty—driven by tariffs, restrictive immigration measures, and potential geopolitical tensions—might create a stagflationary scenario with weaker growth and elevated inflation risks.

J.P. Morgan projects a moderate slowdown in GDP growth to 2% in 2025, with unemployment expected to rise slightly to 4.5%. 

Despite this cooling, the business cycle appears resilient, with labor market tightness gradually easing. 

Job growth is predicted to remain subdued, and layoffs are likely to stay low. However, reduced immigration could constrain labor supply and growth in key industries.

Wage growth is also expected to cool further, falling into the low 3% range by the second half of the year. Combined with modest productivity gains, these dynamics suggest that real compensation growth will continue to support consumer spending, albeit at a slower pace.

Core PCE inflation, a key metric for the Federal Reserve, is expected to decelerate to 2.3% by year-end, closer to the Fed’s long-term 2% target. Inflation pressures from tariffs on China, however, could present risks. 
 

A proposed 60% across-the-board tariff on Chinese goods, if implemented, might raise core inflation by 0.2 percentage points, though the broader impact on price stability remains uncertain.

The Federal Reserve is projected to continue easing monetary policy, with incremental rate cuts throughout the year. 

By September, the Fed funds target rate is expected to stabilize at 3.5-3.75%, a shift reflecting the Fed’s cautious optimism about managing inflation without undermining employment.

Trade policy looms large in the 2025 outlook. Analysts expect new tariffs on China to disrupt trade flows, reducing U.S. export growth while raising costs for imported goods. Meanwhile, the potential for broader tariff measures—targeting global trade—adds to the uncertainty.

On the fiscal side, the report anticipates a significant expansion in federal deficits. The likely extension of the 2017 Tax Cuts and Jobs Act provisions, alongside increased defense and domestic spending, could push the deficit to 7% of GDP by 2026. 

Such levels are concerning in an environment of full employment and muted GDP growth.

Corporate investment is expected to grow modestly, buoyed by consumer demand and federal incentives for specific sectors like infrastructure and technology. 

However, analysts note that business spending remains cautious, with companies prioritizing balance sheet health over expansion.

Real consumer spending, a key driver of economic activity, is forecasted to grow at a slightly slower rate of 2% in 2025. 

Moderating wage growth, combined with tighter credit conditions and reduced household savings, will likely temper the pace of consumption.

By Florence Tan

SINGAPORE (Reuters) - Oil prices hovered near two-week highs on Monday following 6% gains last week, as geopolitical tensions heightened between western powers and major oil producers Russia and Iran, raising risks of supply disruption.

Brent crude futures climbed 13 cents, or 0.2%, to $75.30 a barrel by 0115 GMT, while U.S. West Texas Intermediate crude futures were at $71.38 a barrel, up 14 cents, or 0.2%.

Both contracts last week notched their biggest weekly gains since late September to reach their highest settlement levels since Nov. 7 after Russia fired a hypersonic missile at Ukraine in a warning to the United States and UK following strikes by Kyiv on Russia using U.S. and British weapons.

"The recent exchanges indicate the war has entered a new and dangerous phase, raising concerns of disruptions to supplies," ANZ analysts led by Daniel Hynes said in a note.

In addition, Iran reacted to a resolution passed by the U.N. nuclear watchdog on Thursday by ordering measures such as activating various new and advanced centrifuges used in enriching uranium.

"The IAEA censure and Iran’s response heightens the likelihood that Trump will look to enforce sanctions against Iran’s oil exports when he comes into power," Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia (OTC:CMWAY) said in a note.

Enforced sanctions could sideline about 1 million barrels per day of Iran’s oil exports, about 1% of global oil supply, he said.

The Iranian foreign ministry said on Sunday that it will hold talks about its disputed nuclear programme with three European powers on Nov. 29.

Investors were also focused on rising crude oil demand at China and India, the world's top and third-largest importers, respectively.

China's crude imports rebounded in November as lower prices drew stockpiling demand while Indian refiners increased crude throughput by 3% on year to 5.04 million bpd in October, buoyed by fuel exports.

Investing.com -- The US is to release inflation numbers which will be closely watched as investors try to gauge the future path of Federal Reserve interest rates, while the start of the holiday shopping season and more retail earnings will show how consumer spending is holding up in the face of higher prices. Here's your look at what's happening in markets for the week ahead.

1. Inflation data

The US is set to release the Personal Consumption Expenditures Price index, the Federal Reserve's preferred gauge of underlying inflation, on Wednesday.

Economists are expecting the PCE index to have risen 2.3% annually in October.

While the U.S. is due to release November data on both consumer and producer prices before the Fed’s next meeting on Dec. 17-18 this will be the final PCE report before then.

Recent stubborn inflation data has seen the Fed take a cautious stance towards further interest rate cuts.

Market expectations around whether the Fed will deliver another 25-basis point cut in December or pause are split amid uncertainty over the potential for a rebound in inflation under the incoming Trump administration.

2. Black Friday

Investors will get fresh insights into the health of the U.S. consumer and the retail sector in the coming week as Black Friday marks the start of the holiday shopping season, which will likely indicate how shoppers are coping with higher prices.

Earnings results from two major retailers last week gave two very different perspectives. On Tuesday, Walmart (NYSE:WMT) raised its annual sales and profit forecast for the third consecutive time, while Target shares dropped sharply on Wednesday after it forecast holiday-quarter comparable sales and profit below estimates.

A fresh batch of retail earnings are also due in the coming days, with Best Buy (NYSE:BBY), Macy's (NYSE:M), Nordstrom (NYSE:JWN) and Urban Outfitters (NASDAQ:URBN) all due to report.

3. Trump trade

The ‘Trump trade’ looks likely to remain a key driver of market activity for now.

Investors who bet on "buy crypto and the dollar, sell foreign assets or green" are still in profit, despite a slight slowdown in momentum. Bitcoin is nearing $100,000, up around 50% since early October, when markets favored a Trump election victory. The dollar index has risen 3.6%.

Clean energy, a Trump target, is the worst performer, with iShares' clean energy ETF down nearly 14%. The Mexican peso has lost more than 4%, while European equities are off around 3%.

However, resistance to Trump-driven trades could increase as concerns about stock valuations grow or geopolitical risks challenge the rally in risk assets.

4. Oil prices

Oil prices rose around 1% on Friday, to settle at the highest level in two weeks, as an escalation in the war in Ukraine boosted geopolitical risk premium.

Both crude benchmarks ended the week with gains of about 6% as Moscow stepped up its offensive after Britain and the U.S. allowed Kyiv to strike deeper into Russia with their missiles.

Meanwhile, China, the world's largest oil importer, announced policy measures to boost trade, including support for energy product imports, amid worries over the incoming Trump administration’s threats to impose tariffs.

5. Eurozone inflation

The Eurozone is to release what will be closely watched inflation data on Friday as markets try to gauge the path of European Central Bank monetary policy.

Inflation rebounded to 2% in October after falling below the ECB’s 2% target the prior month.

Data on Friday showed that business activity in the bloc deteriorated sharply this month as the services industry contracted and manufacturing sank deeper into recession.

The ECB has cut rates three times this year and markets are expecting another 25-basis point rate cut in December amid concerns over the economic outlook for the region.

Meanwhile, ratings agency Standard and Poor’s is due to review France's credit rating after Fitch and Moody recently downgraded their outlooks to negative.

Investing.com-- Most Asian stocks rose on Friday, buoyed by strength in chipmaking and cyclical stocks, which helped markets weather heightened tensions over the Russia-Ukraine war. 

Regional markets took some positive cues from Wall Street, with chipmaking stocks tracking strength in NVIDIA Corporation (NASDAQ:NVDA), which hit a record high on Thursday. 

But broader tech stocks were rattled by a sharp drop in Alphabet Inc Class A (NASDAQ:GOOGL) after U.S. authorities made several recommendations to break up the firm’s alleged monopoly in online search. 

U.S. stock index futures were flat in Asian trade, as risk appetite was battered by heightened tensions between Russia and Ukraine. Moscow launched an advanced hypersonic missile on a Ukrainian facility this week and threatened nuclear retaliation for Kyiv’s use of Western-made, long-range missiles.

Most Asian stocks rose past weak risk appetite on Friday, although they were still nursing some losses for the week. 

Japanese shares rise past middling economic data 

Japan’s Nikkei 225 index added 1.2%, while the TOPIX rose 0.8% on gains in tech and cyclical sectors. Both indexes were also headed for mild weekly losses. 

Economic readings offered mixed cues on Japan’s economy. Consumer price index inflation data read slightly higher than expected for October, with underlying inflation rising further above the Bank of Japan’s 2% target. Sticky inflation is likely to invite more rate hikes by the BOJ, with a meeting scheduled for December.

Japanese business activity underwhelmed, with purchasing managers index data showing manufacturing activity shrank more than expected in November. Services activity also barely expanded during the month.

Broader Asian markets were mostly upbeat on Friday. Australia’s ASX 200 rose 1.1%, benefiting greatly from a shift into economically sensitive sectors. The index was also close to record highs.

Australian PMI data showed a contraction in both manufacturing and services activity.

South Korea’s KOSPI rose 1.2%, buoyed by an over 4% jump in memory chip giant SK Hynix Inc (KS:000660), as it tracked strength in Nvidia. While Nvidia’s revenue guidance for the current quarter had initially underwhelmed markets, analysts still maintained a largely positive view on the stock, citing continued demand from artificial intelligence. 

Chinese stocks lagged, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes losing 0.5% each. Hong Kong’s Hang Seng index shed 0.2%, as sentiment towards China was quashed by a lack of details on more stimulus measures. 

Indian stocks nurse losses amid Adani jitters 

Futures for India’s Nifty 50 index pointed to a flat open, after the index slid to an over five-month low on Thursday.

The Nifty was already nursing steep losses through October, having fallen into correction territory after losing over 10% from a September record high.

Sharp (OTC:SHCAY) losses in shares under the Adani Group added to the Nifty’s decline on Thursday, after the conglomerate’s Chairman Gautam Adani was indicted in the U.S. over allegations of bribery and corruption. 

The conglomerate’s flagship Adani Enterprises Ltd (NS:ADEL) slid 22.6%% on Thursday, while Adani Ports and Special Economic Zone Ltd (NS:APSE) lost nearly 14%.