Asian mar­kets down on Trump woes

Kuwait Times - - BUSINESS -

Most Asian mar­kets re­treated yes­ter­day after two days of gains with con­fi­dence hit by fresh rev­e­la­tions re­gard­ing Don­ald Trump’s Rus­sia links. The sell-off over­shad­owed a pick-up in en­ergy firms, which tracked a sec­ond-suc­ces­sive jump in oil prices. Crude, which has seen wild swings in re­cent months, has bounced back from last week’s losses with gains of more than one per­cent Tues­day on bets that US stock­piles had fallen last week.

Com­ments from the OPEC car­tel that its out­put cuts with Rus­sia were bear­ing fruit were also wel­comed and on Wed­nes­day Asian traders ex­tended the oil rally, boost­ing en­ergy com­pa­nies in Hong Kong, Tokyo and Syd­ney. How­ever, the on­go­ing cri­sis sur­round­ing Trump stepped up on Tues­day when his son Don­ald Jr re­leased emails show­ing he had em­braced Rus­sia’s ef­forts to sup­port the ty­coon’s pres­i­den­tial cam­paign against Hil­lary Clin­ton. The news is the lat­est blow to the White House, which has been bat­tered by ac­cu­sa­tions over Russian col­lu­sion and ac­cu­sa­tions of cover-ups-fu­elling wor­ries about the pres­i­dent’s abil­ity to push through his mar­ket-friendly eco­nomic agenda.

“To­day’s rev­e­la­tion ... has sent US po­lit­i­cal risk to an­other level,” said Stephen Innes, a se­nior trader at OANDA. “In­vestors are once again ques­tion­ing Pres­i­dent’s Trump’s ad­min­is­tra­tion abil­ity to pass through a pro-busi­ness agenda/at­ti­tude/stance to fur­ther stim­u­late the US econ­omy.”Tokyo ended 0.5 per­cent lower as in­vestors grow averse to risky as­sets and opt for safer bets such as the yen, which hurts Japanese ex­porters.

Dol­lar re­treats

Shang­hai shed 0.2 per­cent, Syd­ney tum­bled one per­cent and Sin­ga­pore was down 0.4 per­cent. Seoul was 0.2 per­cent lower and Welling­ton gave up 0.6 per­cent. But Hong Kong, sup­ported by the en­ergy rally, climbed 0.6 per­cent to close to its high­est level since mid-2015. On cur­rency mar­kets the dol­lar stepped back from re­cent gains after Fed­eral Re­serve gov­er­nor Lael Brainard in­di­cated the cen­tral bank should take it easy on fu­ture in­ter­est rate hikes.

Her re­marks came ahead of Fed boss Janet Yellen’s two-day con­gres­sional tes­ti­mony, which will be pored over for clues about its mone­tary pol­icy. The dol­lar, which has for years been sup­ported by a move to­wards US tight­en­ing as the econ­omy picks up, has be­gun to fal­ter of late as other global cen­tral banks pre­pare to shift away from the easy money poli­cies put in place after the fi­nan­cial cri­sis. “It’s not just the US cen­tral bank that is look­ing for rate hikes in the fu­ture. There is a solid chance that the Bank of Canada will in­crease rates to­mor­row, and the Bank of Eng­land might fol­low in Au­gust,” said Ax­iTrader mar­ket an­a­lyst Mi­lan Cutkovic.

The green­back was down against both the yen and euro, al­though it was up against the pound. “A uni­fied eu­ro­zone ver­sus a US ad­min­is­tra­tion look­ing a lit­tle pained and dis­com­bob­u­lated after yet an­other vex­ing Rus­sia head­line was the cat­a­lyst to send the euro soar­ing,” OANDA’s Innes added.

Euro­pean stocks mar­kets up­beat

Else­where, Eu­rope’s main stock mar­kets rose solidly yes­ter­day, with Lon­don’s com­modi­ties-heavy FTSE in­dex boosted by firmer oil prices. On cur­rency mar­kets, the dol­lar stepped back from re­cent gains after Fed­eral Re­serve gov­er­nor Lael Brainard in­di­cated the cen­tral bank should take it easy on fu­ture in­ter­est rate hikes.

Her re­marks came ahead of Fed boss Janet Yellen’s two-day con­gres­sional tes­ti­mony, which will be pored over for clues about mone­tary pol­icy. The dol­lar, which has for years been sup­ported by a move to­wards US tight­en­ing as the econ­omy picks up, has be­gun to fal­ter of late as other global cen­tral banks pre­pare to shift away from the easy money poli­cies put in place after the fi­nan­cial cri­sis.

“It’s not just the US cen­tral bank that is look­ing for rate hikes in the fu­ture. There is a solid chance that the Bank of Canada will in­crease rates to­mor­row, and the Bank of Eng­land might fol­low in Au­gust,” said Ax­iTrader mar­ket an­a­lyst, Mi­lan Cutkovic. In Lon­don, the bench­mark FTSE 100 in­dex of ma­jor blue-chip com­pa­nies was up 1.0 per­cent near­ing mid­day, as traders re­acted also to a dip in Bri­tish un­em­ploy­ment to 4.5 per­cent, a 42-year low.

“A weaker US dol­lar helped com­mod­ity prices to rally, putting min­ers at the top of the FTSE 100, while a resur­gence in oil prices meant that BP and Shell were not far be­hind,” noted Chris Beauchamp, mar­ket an­a­lyst at traders IG. Crude, which has seen wild swings in re­cent months, has bounced back from losses last week with gains of more than one per­cent Tues­day on bets that US stock­piles had fallen last week.

Com­ments from the OPEC car­tel that its out­put cuts with Rus­sia were bear­ing fruit were also wel­comed. How­ever, the on­go­ing cri­sis sur­round­ing Trump stepped up on Tues­day when his son Don­ald Jr re­leased emails show­ing he had em­braced Rus­sia’s ef­forts to sup­port the ty­coon’s pres­i­den­tial cam­paign against Hil­lary Clin­ton.

The news is the lat­est blow to the White House, which has been bat­tered by ac­cu­sa­tions over Russian col­lu­sion and ac­cu­sa­tions of cover-ups-fu­elling wor­ries about the pres­i­dent’s abil­ity to push through his mar­ket­friendly eco­nomic agenda. The “rev­e­la­tion... has sent US po­lit­i­cal risk to an­other level”, said Stephen Innes, trader at Oanda trad­ing group. “In­vestors are once again ques­tion­ing the abil­ity of Pres­i­dent Trump’s ad­min­is­tra­tion to pass through a pro-busi­ness (agenda) to fur­ther stim­u­late the US econ­omy.” —Agen­cies

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