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Asia: Markets rally further after Wall St records

Thursday, January 26, 2017 - 11:35

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[HONG KONG] The global rally in stocks extended into Thursday, with Tokyo leading a surge in Asian markets following another record close on Wall Street that saw the Dow hit a historic milestone.

After weeks of unease across trading floors, investors around the world have refound the optimism that fuelled a surge in the two months after Donald Trump was elected president.

The latest lease of life comes after the tycoon signed a series of executive orders pushing his pro-growth agenda, including giving the green light to two huge, controversial oil pipeline deals through the United States.

There are hopes he will press on with other promises to ramp up infrastructure spending, cut taxes and do away with various regulations he considers a hindrance to businesses.

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Added to this were a series of upbeat earnings reports from big-name firms including Boeing and United Technologies.

In New York the Dow ended above 20,000 for the first time in its history, while the S&P 500 and Nasdaq also closed at all-time highs as investors shift back to higher-yielding investments and away from safe bets such as bonds.

Asian dealers tracked their counterparts on Thursday, with Tokyo ending the morning 1.4 per cent higher. Hong Kong added 1.2 per cent and Shanghai gained 0.3 per cent.

Seoul jumped 0.8 per cent and Singapore 0.4 per cent, while Wellington, Manila and Jakarta also pushed upwards. Sydney was closed for a public holiday.

"The US economy is doing well, corporate earnings are good and it looks like Mr Trump's policies will keep improving the economy," Mitsushige Akino, an executive officer at Ichiyoshi Investment Management Co in Tokyo, told Bloomberg News.

"With bond yields increasing, we're seeing gradual moves from bonds to risk assets."

However, the dollar turned lower against most of its peers as investors mull comments from Mr Trump and his nominee for Treasury Secretary Steve Mnuchin that the unit is too strong and could hurt the US economy.

"We may have underestimated... investor sentiment towards Mr Mnuchin and Mr Trump's comments on the dollar," said Stephen Innes, senior trader at Oanda, in a note.

"Of course, this does not mean it's open season to sell dollars; it is certainly weighing on sentiment as there is little dollar appeal in the markets."

The US unit's general weakness also saw it tumble more than two per cent against the Mexican peso despite news Mr Trump had ordered work to begin on planning and building a wall along the US-Mexico border.

The dollar bought a little more than 21 pesos on Thursday, well down from the record levels above 22 pesos touched earlier this month.

AFP

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