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Asia: Most markets extend gains after tax-fuelled Wall St records
[HONG KONG] Most Asian markets extended their winning streak Tuesday, taking a lead from fresh records on Wall Street where a long-awaited tax-cut bill is expected to be passed by US lawmakers this week.
After months of uncertainty, the controversial fiscal reforms are due to be voted on in the next few days and could be on Donald Trump's desk before the end of the year, giving the embattled president his first major legislative victory.
"Equity markets have started the week in an extremely enthusiastic manner anticipating tax reform holiday cheer," Stephen Innes, head of Asia-Pacific trading at OANDA, said.
"There's a definite buzz on the street as we approach the finishing line as there are few if any signs of buyer fatigue." All three main indexes on Wall Street ended at their highest levels for a second successive day and those advances filtered through to Asia.
Hong Kong added 0.7 per cent and Shanghai gained 0.4 per cent while Sydney put on 0.6 per cent and Singapore edged up 0.1 per cent.
Tokyo ended the morning slightly higher after jumping 1.6 per cent on Monday on the back of a pick-up in the dollar against the yen. Wellington and Taipei were also higher.
However, while equity markets are pushing ever higher the dollar is struggling to break out against its peers.
Greg McKenna, chief market strategist at AxiTrader, said traders possibly were not as excited by the latest positive developments as their stock-dealing counterparts.
"Not the actual growth level, not the fact the Federal Reserve is so far ahead of the (European Central Bank or Bank of Japan) when it comes to monetary policy, not what the Fed says it is going to do, and not that the tax plan could add an additional impetus to growth," he said.
The dollar, which rallied on Friday on news that Republican senators had the votes to pass the tax bill, struggled to hold its gains and was down against the euro and pound.
It also lost two per cent against the South African rand as investors cheered news that the businessman Cyril Ramaphosa had been elected president of the ruling ANC, putting him on course to take over as Jacob Zuma to lead the country.
The rand had already surged 2.8 per cent on Monday.
The win has led to hopes the market-friendly Ramaphosa can turn around the struggling economy, though analysts were guarded about his chances of success.
"Ramaphosa's election, in and of itself, is positive," Christian Diclementi at AllianceBernstein told Bloomberg News.
"But the mix of new leaders at the top of the ANC is not quite what the market would have liked. Ramaphosa's win perhaps buys South Africa time to avoid further (credit) downgrades, but it's difficult to see how that can be avoided altogether."