Asian markets extend global rally on Trump relief

HONG KONG: Asian markets pressed ahead with a global ral ly yesterday fol lowing another record close in New York as traders welcomed Donald Trump’s promise of details on tax reform and his softer tone on China and Japan at the weekend.

Shares soared at the end of the week after the new US president finally broke his silence over fiscal policy, saying he would unveil a “phenomenal” tax plan within three weeks.

That was fol lowed by his reaf f irmation that he recognises Beijing’s “One China” policy towards Taiwan and a positive weekend meeting with Japanese Prime Minister Shinzo Abe.

The developments fuelled some much- needed rel ief to traders who had grown increasingly worried about Trump’s outbursts against both countries’ trade policies and his lack of detail on the domestic front.

Adding to the positivity was a forecast-busting reading on Chinese trade, which raised hopes a growth slowdown in the world’s number two economy could be bottoming. — AFP

The gross domestic product (GDP)datashowedfourconsecutive quarters of growth – the longest expansion since 2013 – but the annual figure was lower than the 1.2 per cent growth registered in 2015, according to the Cabinet Office.

Government spending measures and a drop in the yen were key growth drivers, even as Japanese consumers kept a tight lid on spending.

“This is really an export-driven recovery we’re talking about,” said Izumi Devalier, chief economist at Merrill Lynch Japan Securities.

“Private consumption has been pretty weak still, and unless we get private consumption fired up, it’s hard to see growth accelerating very strongly from here.”

Japan’s once-booming economy has suffered from years of deflation, which can discourage spending by consumers as they postpone purchases until prices drop further or just save their money, creating further pressure on businesses.

Doubts have been growing over Japanese leader Shinzo Abe’s ‘Abenomics’ – a mix of massive monetary easing, government spending and red-tape slashing – with growth still fragile and inflation well below target.

But exporters have benefited from the fall of the yen – which boosts their profitability – since Donald Trump’s November US presidential election victory.

The yen has lost about 10 per cent of its value against the dollar since the poll as traders bet Trump’s planned infrastructure spending and tax-cuts will drive growth in the world’s top economy and perk up inflation, in turn pressuring the US central bank to ramp up interest rates. — AFP