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Dollar falters as bond yields drop as Trump’s cabinet choices loom over market sentiment

Asian stock markets rose on November 19 as US bond yields and the dollar retreated from multi-month highs. This was accompanied by investors closely following President-elect Donald Trump's cabinet appointments and Federal Reserve rate expectations. The spotlight still remained on how Trump's policies and recent economic data might shape monetary policy and global markets.

Tech shares led the advance across the region, supported by Wall Street's recovery from losses last week. However, Nvidia earnings due on November 20 have kept investors cautious about making larger bets. Market expectations for a rate cut by the Federal Reserve in December have eased, meanwhile.

According to a Reuters report, CME FedWatch says the probability of a quarter-point cut now stands at less than 59%, down from 62% as of yesterday and more than 65% a week ago. Moreover, analysts believe fiscal spending proposed by Trump amongst tariffs and tighter immigration policies can boost inflation.

Trump has begun forming his cabinet, by announcing appointments in health and defence. However, some key roles, including the appointment of a treasury secretary and trade representative, remain open, keeping financial markets uncertain.

On the contrary, Asian indexes rose modestly. Japan's Nikkei (.N225) was at 0.2%, while South Korea's Kospi (.KS11) and Australia's ASX 200 (.AXJO) increased by 0.1% each. Hong Kong's Hang Seng (.HSI) is up 0.8%, as is China's mainland blue chips (.CSI300) by 0.3%.

Global stocks also stabilized after a tough week. MSCI’s world stock index (.MIWD00000PUS) ended a four-day losing streak on November 18. “With a lack of data and a lull in market-moving news…the marginal driver of asset prices right now is how the incoming Trump administration will impact economic conditions, international trade, and global geopolitics,” said Kyle Rodda, senior financial markets analyst at Capital.com.

Meanwhile, US Treasury yields continued to decline. The two-year yield slipped to 4.278%, while the 10-year yield fell to 4.412%. The dollar index remained flat at 106.20, hovering near Monday's low of 106.12 after peaking last week at 107.07.

Safe-haven gold was steady at $2,614.80 on November 19 after surging close to 2% on November 18. This is being attributed to the rising geopolitical tensions and a weaker dollar were the metal's support. Oil prices increased as Brent crude gained to $73.37 a barrel and US West Texas Intermediate advanced to $69.26. A power outage at Norway's Johan Sverdrup oilfield drove up crude.

Bitcoin traded around $90,960, consolidating after reaching a record $93,480 last week. There's been optimism regarding the prospect of benign US cryptocurrency regulation under Trump that has kept the digital asset elevated.

Geopolitical risks remain a concern, as the Biden administration recently approved the use of US-made arms against strikes deep into Russia by Ukraine. The Kremlin describes it as reckless, warning that it might further escalate the conflict and increase the risk of confrontation with NATO.