HONG KONG: Asian markets rose Friday on the back of a stronger US dollar and investor optimism over President Donald Trump’s long anticipated tax cuts.
Bourses across the region, including the major indexes in Tokyo and Hong Kong, tracked an upward swing on Wall Street after a slew of solid US corporate earnings reports and progress on Trump’s tax reform plan.
The president’s proposed measures narrowly passed a hurdle in the House of Representatives, which approved a budget resolution that paves the way for debate on his plan for $1.5 trillion in tax cuts.
Eurozone stocks and the dollar also shot up on news that the European Central Bank (ECB) would soon begin to cut back its monetary stimulus programme.
“It has been a good night on global stock markets as first the… ECB decision and announcement drove stocks across the continent higher and then the passage of the 2018 budget resolution by the US House of representatives together with solid earnings reports saw US stocks higher,” said Greg McKenna, chief market strategist at AxiTrader.
“That US dollar surge at a time of solid global growth expectations is going to be good for (Asia)… as the depreciation it speaks to for many Asian currencies will improve their competitiveness,” he added.
Tokyo rose 0.9 percent, bolstered by the yen’s weakness against the dollar, a positive for Japanese exporters as it makes their products more competitive abroad and inflates their repatriated profits.
“Japanese stocks will test higher prices as investors cheer a rebound in the New York Dow, the yen’s fall… and the ECB decision to cut back on its monetary stimulus plan,” said Yoshihiro Ito, chief strategist at Okasan Online Securities.
Among the gainers, Toyota rose 0.4 percent while Sony gained 0.2 percent.
But Subaru fell 2.6 percent on local media reports that uncertified junior workers inspected vehicles at a domestic factory before they were shipped to dealers. The company declined to comment on the reports, saying an in-house probe was underway.
– Eurozone, Wall Street gains –
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Hong Kong also gained 1.0 percent, while Seoul and Singapore rose 0.5 percent.
The positive news for the markets kicked off with the ECB announcement that it would halve its purchases of government and corporate bonds to 30 billion euros ($35 billion) a month.
The euro fell against the dollar and Eurozone equities pushed higher, with Frankfurt hitting a record high on Thursday and closing the day up 1.4 percent. Paris jumped 1.5 percent.
On Wall Street, the blue-chip Dow Jones Industrial Average gained 0.3 percent following solid earnings reports including from Ford and UPS as well as congressional progress on Trump’s tax cut plan.
Investors had been anxious over the fate of the cuts following an ongoing spat between Trump and critics within his own party.
– Key figures around 0300 GMT –
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Tokyo – Nikkei 225: UP 0.9 percent at 21,943.24 (break)
Hong Kong – Hang Seng: UP 1.0 percent at 28,490.16
Shanghai – Composite: UP 0.3 percent at 3,418.48
Euro/dollar: DOWN at $1.1635 from $1.1652 at 2100 GMT
Pound/dollar: DOWN at $1.3130 from $1.3160
Dollar/yen: UP at 114.15 yen from 114.00 yen
Oil – West Texas Intermediate: UP one cent at $52.63 per barrel
Oil – Brent North Sea: DOWN four cents at $59.34 per barrel
New York – DOW: UP 0.3 percent at 23,400.86 (close)
London – FTSE 100: UP 0.5 percent at 7,486.50 points (close)
Source: Brecorder.com
