Asian stocks faced a downturn on Wednesday, mirroring the drop in U.S. markets as the fervor around the "Trump trade" waned following Donald Trump's presidential victory. Japan's Nikkei 225 fell by 1.7%, influenced in part by a surge in wholesale inflation, with the corporate goods price index indicating a 3.4% rise in October year-over-year, attributed partly to the weakening of the Japanese yen against the U.S. dollar.
The decline in Asian stocks continued with South Korea's Kospi losing 2.6%, primarily driven by a 4.5% drop in Samsung Electronics shares. Meanwhile, Hong Kong's Hang Seng also dropped for a fourth consecutive day, falling by 0.6%, while China's Shanghai Composite managed to gain 0.3%. The weakening trend extended to U.S. futures, coupled with an increase in oil prices.
The recent surge in stock prices post-Trump's victory was fueled by expectations of economic growth under his leadership, although concerns over higher inflation, U.S. government debt, and tax rates led to a slight market correction. The Russell 2000 index witnessed a 1.8% decline, and even Tesla, under the leadership of Trump ally Elon Musk, faced a 6.1% drop. Additionally, rising Treasury yields added pressure on the stock market, with Trump's policies contributing to inflation concerns and the bond market's movements.