Asian markets hit by Trump fears, weak yen
JAPANESE stocks soared yesterday as the dollar reached a four-month high against the yen, but most other Asian markets were hit by worries about the impact of Donald Trump’s presidency on global trade.
Equities have seen volatile trading since the tycoon’s shock election win, with his pledge of big-spending measures and tax cuts leading to predictions of a surge in inflation and higher borrowing costs.
The prospect of better and safer returns in the US has also led to an exodus from emerging markets.
Tokyo’s Nikkei ended up 1.7 percent, with exporters rallying on the back of the weakened yen. “The Federal Reserve now face the conundrum of rising inflation expectations,” Chris Weston, chief market strategist in Melbourne at IG Ltd, said.
“What we saw last week was a genuine change in the thought process of many money managers, with some feeling we need to be prepared for inflation, while many others have been truly sceptical of the moves and note that while markets are firmly in the ‘hope’ phase there are great execution risks.”
Wellington gained 0.5pc as a deadly earthquake in New Zealand’s south island boosted construction firms on expectations of a rebuilding program. Shanghai put on 0.5pc despite disappointing retail sales and industrial output data for October.
However, Hong Kong sank 1.4pc, extending a heavy loss, while Seoul and Sydney each shed 0.5pc and Singapore fell 0.9pc.
Manila dived 1.5pc and Jakarta was 1.8pc lower, over concerns that Mr Trump’s protectionist rhetoric could see him throwing up tariffs.
The prospect of higher US interest rates battered higher-yielding currencies last week and South Korea’s won was down 0.6pc, the Philippine peso fell 0.5pc and the Thai baht lost 0.1pc.
“Asian currencies continue [to come] under almost universal pressure in the aftermath of Donald Trump’s victory as traders bet that an isolationist and protectionist presidency could harm the region,” Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a statement. –