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Asia: Markets track global losses as Trump woes weigh

Tuesday, February 7, 2017 - 11:06

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[HONG KONG] Asian markets mostly tumbled on Tuesday, with concerns about European elections and Donald Trump's unpredictable presidency fuelling uncertainty.

With investor nerves shredded by a succession of outbursts from the new US president, safe-haven assets are on the rise, with the yen surging to three-month highs against the dollar and gold pushing higher.

The weakness across markets is in contrast to the two-month rally that followed Trump's election win in November, when dealers bet his big-spending, tax-cutting plans would fan US growth and inflation, forcing interest rates up.

Tokyo's Nikkei ended the morning session 0.5 per cent lower as the stronger yen hit exporters. The greenback was hovering around 111.70 yen and has about five per cent this year.

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The Japanese unit has surged against the dollar, clawing back most of the losses seen since Mr Trump's November election, after he accused Tokyo and Beijing of currency manipulation to get a trade advantage over the US.

Japan's former vice-minister of finance for international affairs Eisuke Sakakibara said this week that Mr Trump's desire to boost US jobs means he must boost exports.

"In order to do so, Trump is leaning to a weak dollar policy by, for example, criticising Japan for adopting weak yen policy," Mr Sakakibara, who has predicted the dollar to fall below 100 yen, said.

Japanese Prime Minister Shinzo Abe is expected to discuss trade when he meets Trump in the US at the weekend.

Among other markets Hong Kong and Shanghai were flat, while Sydney shed 0.3 per cent and Seoul gave up 0.1 per cent. Wellington was 0.4 per cent down but Singapore added 0.3 per cent and Taipei 0.1 per cent.

Dealers tracked a sell-off on Wall Street where energy firms were hit by falling oil prices, while European traders are increasingly worried about upcoming polls in Germany and France.

Two of Europe's biggest economies hold general elections this year and there are fears that they could succumb the surge in populist parties that could threaten the break-up of the European Union.

Stephen Innes, senior trader at forex firm OANDA, said: "The market's tone has been one of risk-off, as political fallout in both Europe and the United States is weighing on investor resolve, imposing an unpalatable risk on investor sentiment." European Central Bank boss Mario Draghi said Monday that "risks to the euro area outlook remain tilted to the downside and relate predominantly to global factors", and that he stood ready to further ease its monetary policy if necessary.

REUTERS

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