TOKYO – Asian stocks were largely lower on Tuesday as concerns spread over President-elect Donald Trump’s statement that he plans to impose sweeping new tariffs on Mexico, Canada and China as soon as he takes office.

Japan’s benchmark Nikkei 225 fell 1.2% to 38,305.20 and Australia’s S&The P/ASX 200 lost 0.4% to 8,384.80. South Korea’s Kospi fell 0.6% to 2,518.58. Hong Kong’s Hang Seng rose 0.4% to 19,223.94, while the Shanghai Composite rose 0.4% to 3,277.82.

Stocks rose on Wall Street on Monday, with companies set to benefit most from lower interest rates and a stronger economy. The S&The P 500 rose 0.3% to 5,987.37, approaching its all-time high reached two weeks ago. The Dow Jones Industrial Average added 1% to its own record on Friday, closing at 44,736.57, while the Nasdaq Composite rose 0.3% to 19,054.84.

Treasury yields fell in what some analysts called a “Bessent rally” after Trump said he wanted to make Scott Bessent, a hedge fund manager, his Treasury secretary.

Bessent has advocated for reducing the U.S. government’s deficit, that is, how much more it spends than it takes in through taxes and other revenues. Such an approach could ease concerns on Wall Street that Trump’s policies could lead to a much larger deficit, which in turn would put upward pressure on Treasury yields and drive down prices.

After rising above 4.44% immediately after Trump’s election, the 10-year Treasury yield fell back to 4.26% on Monday, compared with 4.41% late Friday. That’s a notable move, and lower yields make it cheaper for all types of businesses and households to borrow money. They also increase the prices of stocks and other investments.

The Russell 2000 index of smaller stocks rose 1.5%. It ended just below its all-time high set three years ago. Smaller businesses may see a greater boost from lower borrowing costs, as many of them need to borrow to grow.

The yield on two-year U.S. Treasury bonds, which better reflects market expectations about what the Federal Reserve will do with overnight interest rates, also fell sharply.

The Fed began cutting its key interest rate from a two-decade high just a few months ago, hoping to keep the labor market buoyant after inflation had fallen almost entirely to its 2% target. But immediately after Trump’s victory, traders had reduced their bets on how many interest rate cuts the Fed might make next year. They feared that Trump’s preference for lower tax rates and increased spending at the border would drive up the national debt.

A report due out on Wednesday could influence how much the Fed might cut interest rates. Economists expect this will show that an underlying inflation trend favored by the Fed accelerated to 2.8% last month from 2.7% in September. Higher inflation would make the Fed more reluctant to cut interest rates as much or as quickly as it otherwise would.

At the Stock Exchange, Bath & Body Works rose 16.5% after the company posted a higher profit than analysts expected in its latest quarter. The provider of personal care products and home fragrances also raised its financial forecasts for the full year.

A big focus has been on how resilient U.S. buyers can remain amid high prices across the economy and still-high interest rates.

Another major retailer, Macy’s, said Monday that its sales in the latest quarter were in line with expectations, but the release of full financial results would be delayed. A single employee was found to have intentionally concealed up to $154 million in delivery costs, and more time is needed to complete the investigation. Macy’s shares fell 2.2%.

In other business early Tuesday, benchmark U.S. crude oil rose 23 cents to $69.17 a barrel. Brent crude, the international standard, rose 19 cents to $72.67 a barrel.

In foreign exchange trading, the US dollar slipped to 153.82 Japanese yen from 154.11 yen. The euro was at $1.0462, down from $1.0499.

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AP business reporter Stan Choe contributed.