USD Rebounds in Asia, Markets Fall
The dollar pressed on with its recovery against the yen on rekindled hopes for Donald Trump’s tax plan, lifting Japanese stocks for a fourth day but most other Asian markets struggled to build on the week’s gains.
Wall Street provided another positive lead with a second-straight record for all three main indexes after Republicans set a September 25 target for releasing a plan to slash taxes while surging oil prices boosted energy firms.
The announcement out of Washington fanned optimism the president’s market-friendly agenda to boost the economy could see the light of day.
World markets soared for months after Trump’s November election win on hopes for such reforms but his struggles to push through any major legislation since taking office, as well as a series of controversies, have forced him to put his plans on the backburner.
Greg McKenna, chief market strategist at AxiTrader said there was confidence among traders that the US economy would continue to grow either moderately or power ahead.
This, he added, “raises chances that President Trump reaching across the aisle will activate a mechanism to get tax cuts — perhaps even tax reform — done”.
Investors were last week surprised when the tycoon reached a deal with Democrats to raise the US debt limit and avert a government shut-down, fanning hopes he can strike further agreements in future.
The greenback bounced back above 110 yen, having fallen last week to a 10-month low around 107.30 yen on worries about North Korea’s missile and nuclear tests.
In Asian trade it extended gains against the Japanese unit, while it was also building on a rally against the euro.
The single currency was stuck below $1.19 Thursday, having flirted with $1.21 just a week ago.
Equity markets, however, were unable to maintain momentum as investors took profits from a healthy start to the week that came on the back of relief that North Korea tensions had eased and Hurricane Irma had not been as devastating to Florida as feared.
By the break, Tokyo’s Nikkei was flat after climbing for three straight days as the softening yen was unable to fend off profit-takers.
Hong Kong slipped 0.2 percent and Shanghai pared early gains to sit flat after a disappointing print on Chinese factory production, retail sales and state investment.
Sydney and Singapore each eased 0.1 percent and Seoul was flat. Wellington, Jakarta and Taipei were slightly higher.