(Bloomberg) -- Stocks paused their advance on Tuesday amid signs the rally had left valuations overextended and as investors weighed the potential policy impact of Donald Trump’s cabinet picks.

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Europe’s Stoxx 600 gauge lost 1%, almost erasing Monday’s surge. US futures edged lower after five days of gains for the S&P 500. Treasuries also fell as trading resumed following a public holiday. Bitcoin bucked the declines, meanwhile, continuing its record-breaking rally and nearing the $90,000 mark.

Investors have driven exposure to the US equities benchmark to the highest in three years since Trump’s win, suggesting the rally could run out of steam, according to Citigroup Inc. analysts. The new administration will reportedly feature prominent China hawks and strategists are pondering the potential for Trump’s economic policies to spur inflation and affect the path for Federal Reserve interest rates.

“There are question marks around another round of Trump tariffs, the deficit and upward pressure on the dollar, forcing the Fed to slow the pace of easing,” said Phillip Wool, head of portfolio management at Rayliant Global Advisors. “All of those anxieties seem to be registering more significantly with investors today.”

Hong Kong’s Hang Seng Index slipped as much as 3.3%. Senator Marco Rubio — who has taken an aggressive stance on China’s emergence as an economic power — is expected to be named secretary of state, Bloomberg reported. Representative Mike Waltz, who views China as a “greater threat” to the US than any other nation, is in line to be national security advisor.

“Trump’s reported appointments of well-known China hawks such as Marco Rubio and Mike Waltz are indeed weighing on the Hong Kong market’s sentiment,” said Homin Lee, senior macro strategist at Lombard Odier. “This underscores the high likelihood of Trump following through on his campaign pledge to implement punitive tariffs on China’s exports to the US.”

US inflation data due Wednesday is the next major item on the agenda this week for investors. The core consumer price index, which excludes food and energy, likely rose at the same pace on both a monthly and annual basis compared with September’s readings.

Key events this week:

• Germany CPI, ZEW survey, Tuesday

• Fed speakers include Christopher Waller, Patrick Harker and Neel Kashkari, Tuesday

• Fed issues survey of senior bank loan officers, Tuesday

• Eurozone industrial production, Wednesday

• US CPI, Wednesday

• Fed speakers include Jeffrey Schmid, Lorie Logan, Neel Kashkari and Alberto Musalem, Wednesday

• Eurozone GDP, Thursday

• US PPI, jobless claims, Thursday

• Walt Disney earnings, Thursday

• Fed speakers include Jerome Powell, John Williams and Adriana Kugler, Thursday

• China retail sales, industrial production, Friday

• US retail sales, Empire manufacturing, industrial production, Friday