• Asian stocks are rising, the dollar is weakening, and U.S. yields are dipping due to anticipation surrounding President-elect Donald Trump's cabinet selection and potential Federal Reserve easing.
• Markets have adjusted their expectations for a Fed rate cut based on Trump's proposed fiscal spending, higher tariffs, and tighter immigration policies.
• Geopolitical tensions, particularly the Russia-Ukraine war, are influencing financial markets, buoying oil and gold prices.
• The global financial landscape is in flux, influenced by geopolitical tensions and U.S. policy changes, requiring investors to stay informed and adapt.

The global financial landscape is witnessing a significant shift as Asian stocks rise, the dollar weakens, and U.S. yields tick down. This shift is largely influenced by the anticipation surrounding President-elect Donald Trump's cabinet selection and the potential outlook for Federal Reserve easing.

Asian stocks saw an uptick on Tuesday, while U.S. bond yields and the dollar remained at multi-month highs. Tech shares also advanced, mirroring Wall Street's recovery from the previous week's steep losses. However, the upcoming Nvidia earnings on Wednesday limited the scope for significant moves.

Trump's Policies and Market Expectations

The markets have adjusted their expectations for a quarter-point interest-rate cut at the Fed's next meeting in December to less than 59%, down from 62% a day earlier and more than 65% a week ago. This adjustment is based on the CME FedWatch data.

Trump's proposed fiscal spending, higher tariffs, and tighter immigration policies are perceived as inflationary by analysts. These policies could potentially hinder Fed rate cuts, which are already being challenged by a series of resilient economic data. Trump has started making appointments, filling health and defense roles last week. However, key positions for financial markets, such as the Treasury secretary and trade representative, are yet to be announced.

Asian markets, including Japan's Nikkei, South Korea's Kospi, and Australia's equity benchmark, each ticked up slightly. Hong Kong's Hang Seng climbed 0.8%, and mainland blue chips gained 0.3%. U.S. S&P 500 futures pointed slightly lower, but following a 0.4% advance overnight for the cash index.

Geopolitical Tensions and Financial Markets

The global geopolitical landscape is also influencing the financial markets. The escalating tensions in the Russia-Ukraine war have buoyed oil and gold prices. In a significant policy reversal, President Joe Biden's administration allowed Ukraine to use U.S.-made weapons to strike deep into Russia. This decision has heightened concerns about a potential confrontation with the U.S.-led NATO alliance.

The U.S. Treasury yields extended overnight declines, with the two-year yield ticking down to 4.278% and the 10-year yield edging down to 4.412%. This has kept pressure on the dollar, which languished close to its overnight low versus major peers.

Bitcoin, which surged to a record high of $93,480 last week on bets for more favorable cryptocurrency regulation under Trump, continued its week-long consolidation around $90,000. Safe-haven gold was flat at $2,614.80 after jumping nearly 2% on Monday, its biggest one-day advance since mid-August, amid softness in the dollar and heightened concerns about the Russia-Ukraine conflict.

The escalating tensions continued to push both crude oil benchmarks up on Tuesday, following gains of about $2 a barrel each in the previous session. Brent crude futures added 7 cents to $73.37 a barrel, while U.S. West Texas Intermediate crude futures were at $69.26 a barrel, up 8 cents. Crude was also buoyed by the shutdown of Norway's massive Johan Sverdrup oilfield due to a power outage.