Asia trades higher as Trump rally resumes on tax plans
Asia trades higher as Trump rally resumes on tax plans ·CNBC
Aza Wee Sile
Asian markets climbed higher on Friday, following a boost in U.S. equities on the back of President Donald Trump saying he would soon announce a "phenomenal" tax plan.
"After backsliding for all of the last week, the Trump-reflation trades are suddenly back on again, all stemming from the President's promise of a 'phenomenal' tax plan to be released within 2-3 weeks," said strategists at Macquarie in a Friday note.
The Dow Jones industrial average (Dow Jones Global Indexes: .DJI) added 0.59 percent, to close at 20,172.4 on Thursday. The S&P 500 (^GSPC) index gained 0.58 percent, to end at 2,307.87, while the Nasdaq (^IXIC) composite finished up 0.58 percent at 5,715.18.
"Lowering the overall tax burden on American business is big league ... that's coming along very well. We're way ahead of schedule, I believe. And we're going to announce something I would say over the next two or three weeks that will be phenomenal in terms of tax," Trump said in a meeting with U.S. airline executives.
The dollar also surged against a basket of currencies, to trade at 100.69 on Friday afternoon in Asia.
Trump and Chinese President Xi Jinping spoke on the phone for the first time, and Trump agreed to honor the "One China" policy at Xi's request, the White House said.
Trump had earlier angered China by speaking to Taiwan's leader Tsai Ing-wen in December, in what is believed to be the first time a leader of Taiwan and an American President spoke on the phone since the U.S. and Taiwan cut ties in 1979 at Beijing's request.
As well, China's trade figures surpassed analysts' expectations. January exports grew 7.9 percent from a year earlier as imports rose 16.7 percent on dollar-terms, while yuan-denominated exports rose 15.9 percent in January on-year, while yuan-denominated imports rose 25.2 percent. The trade surplus stood at $51.35 billion for the month.
Companies involved with One Belt One Road (OBOR), China's global infrastructure push, saw their shares jump after the Ministry of Commerce said Thursday it would continue to push for the initiative and work on bilateral ties with countries along OBOR, Reuters reported.
Bellwether China Communications Construction added 7.13 percent, while China Railway Construction climbed 3.89 percent and China Gezhouba soared 4.66 percent.
The Shanghai composite (Shanghai Stock Exchange: .SSEC) added 0.67 percent and Shenzhen composite (Dow Jones Global Indexes: .DJSZ) recovered from earlier losses to trade up 0.02 percent.
In markets, Japan's Nikkei 225 (Nihon Keizai Shinbun: .N225) led the gains, up 2.48 percent as the yen weakened against the dollar. A weaker yen is seen as a positive for Japanese stocks as it makes exports cheaper and increases the value of repatriated profits.
The greenback also gained more than 1 percent against the yen (:OSEJPY=) in overnight trade, and tracked 113.66 on Friday, compared to levels around 112 yesterday.
Investors are likely to eye headlines about Japanese Prime Minister Shinzo Abe's visit to the U.S. for a two-day summit meeting with Trump.
"This meeting takes place amid concerns in Japan about what the Trump administration's "America First" construct means for U.S. foreign policy in Asia, as well as the implications of trump's formal withdrawal from the Trans-Pacific Partnership (TPP) for bilateral economic ties," said policy experts at the Center for Strategic and International Studies (CSIS), in a Wednesday note.
Down Under, the ASX 200 (^AXJO) rose 0.99 percent. In the Reserve Bank of Australia's meeting minutes, the central bank cut its near-term forecasts for economic growth after a shock contraction in the third-quarter, but expects a rebound over the next two years, indicating that further rate cuts are unlikely, Reuters reported.
The RBA held rates steady at record low 1.5 percent on Tuesday, as expected, and appeared to signal it would remain on hold for some time.
Australia's gold sub-index plunged 2.56 percent as gold prices slipped from its three-month high.
The Australian dollar (Exchange:USDAUD=) remained resilient even after the dollar rallied overnight, at $0.7654.
In South Korea, the Kospi (Korea Stock Exchange: .KS11)added 0.54 percent, while the Hang Seng (Hong Kong Stock Exchange: .HSI) was up 0.56 percent.
On Friday morning Asia time, a U.S. Federal Appeals Court unanimously said that it would uphold its temporary suspension of President Trump's order to ban travelers from seven Muslim-majority countries, Reuters said. The final decision will likely end up in the hands of the U.S. Supreme Court.
Trump's immigration ban had caused global backlash from political leaders, industries and led to mass protests around the world. It also raised concerns about how protectionist the Trump administration would be.
The former reality TV star subsequently tweeted a challenge after the federal appeals court decided to uphold the suspension of his executive order.
Also on the markets' radar is rating agency Moody's review of Italy (BBB) and France's (AA) sovereign ratings later in the day.
"This does not necessarily mean any ratings actions but should be worth monitoring given how French yields have been rising in recent sessions," Macquarie's strategists said.
Nervous sentiment over far-right National Front party leader Marine Le Pen, ahead of the presidential elections in spring, have widened the spread between French bond yields over German ones to multi-year highs this week, Reuters reported.
Global benchmark Brent crude was up 0.13 percent at $55.70 a barrel Friday during Asian hours and U.S. crude gained 0.19 percent at $53.10.
Spot gold (Exchange:XAU=), seen as a safe haven play, was down recent highs of up to $1,240, trading on Friday at $1,224.70 an ounce.
