Asia: Stocks join global rally as Japan shares surge after Trump

[SINGAPORE] Asian stocks climbed after their biggest selloff since June, as US stocks rallied on speculation Donald Trump will pursue business-friendly policies. Japanese shares surged as the yen slumped.

The MSCI Asia Pacific Index increased 0.2 per cent to 133.73 as of 9:04am in Tokyo. The measure tumbled 3.2 per cent on Wednesday, the most since Brexit roiled global markets, after Mr Trump shocked investors by winning the US presidential race against opponent Hillary Clinton.

Still, the steep selloff that hit Asian markets didn't last through European and American trading hours, with the S&P 500 Index closing up 1.1 per cent as investors digested the news.

"There will be short-term volatility following the Trump victory but this is going to be short-lived, much like Brexit," said Joshua Crabb, Hong Kong-based head of Asian equities at a unit of Old Mutual Plc.

"This outcome isn't as bad as people think. There's going to be some tax cuts and fiscal stimulus. That would be good for corporate earnings and will be positive for equities."

Wednesday's early knee-jerk selloff in global stocks and a rally in haven assets reversed on wagers that Mr Trump would increase fiscal spending to spur economic growth, and as he struck a more conciliatory tone in his first speech as president-elect.

Mr Trump's victory has also clouded the outlook for American monetary policy, amid speculation he could ramp up fiscal stimulus, while also potentially pursuing a more pro-business agenda.

Futures on the S&P 500 Index slipped 0.2 per cent. The US equity benchmark index gained on Wednesday, while the Dow Jones Industrial Average briefly eclipsed its all-time closing high, as shares of banks to heavy equipment manufacturers rallied. The CBOE Volatility Index, a measure of market turbulence, tumbled 23 per cent Wednesday, the most in five years.

World Growth

"Donald Trump as the next US president is unlikely to derail world growth or to impair the current reflation at work across developed economies," Geneva-based Florian Ielpo, head of macroeconomic research at Unigestion SA, which manages US$20 billion globally, said by e-mail.

Mr Trump's economic policies may prove unfriendly to emerging markets in Asia, but not developed economies like Japan, Ielpo said.

Japan's Topix index advanced 3.6 per cent, paring the measure's 4.6 per cent slump on Wednesday, as the yen traded near a three-month low against the US dollar. South Korea's Kospi index rose 1.5 per cent and Australia's S&P/ASX 200 Index increased 2.9 per cent.

New Zealand's S&P/NZX 50 Index jumped 2.1 per cent as the nation's central bank cut interest rates to a record low and said it has probably done enough to return inflation to target as the economy booms.

Futures on the FTSE China A50 Index rose 0.4 per cent in their most recent trading, while those on the Hang Seng Index gained 1.2 per cent. The underlying equity measures have yet to start trading.

BLOOMBERG