Asian markets rise as US dollar gains

[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 Mr 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 US$1.5 trillion in tax cuts.

Eurozone stocks and the US 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 per cent, bolstered by the yen's weakness against the US 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 per cent while Sony gained 0.2 per cent.

But Subaru fell 2.6 per cent 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

Hong Kong also gained one per cent, while Seoul and Singapore rose 0.5 per cent.

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 (S$47.91 billion) a month.

The euro fell against the US dollar and Eurozone equities pushed higher, with Frankfurt hitting a record high on Thursday and closing the day up 1.4 per cent. Paris jumped 1.5 per cent.

On Wall Street, the blue-chip Dow Jones Industrial Average gained 0.3 per cent following solid earnings reports including from Ford and UPS as well as congressional progress on Mr Trump's tax cut plan.

Investors had been anxious over the fate of the cuts following an ongoing spat between Mr Trump and critics within his own party.

AFP