Asian markets down despite US tax cut news

HONG KONG: Asian markets mostly fell on Wednesday as investors took a breather following recent gains, while US senators voted for a controversial tax overhaul which traders expect to

Equities have been on a broad upswing since last week when holdout Republican senators said they would back Donald Trump’s signature tax legislation. The president has prom already healthy US economy.

After months of uncertainty the Senate narrowly passed the deal, which slashes taxes across the board.

The House of Representatives passed the bill on Tuesday but will have to vote again Wednesday owing to a rules mix-up.

Despite the expected passage of the bill, all three main Wall Street indexes ended Tuesday in the red — having clocked up a series of record closes of late — and the weak lead kept Asia tethered.

Hong Kong lost 0.1 percent and Shanghai closed down 0.3 percent, while Singapore shed 0.2 percent.

Tokyo and Sydney each ended up 0.1 percent but Seoul eased 0.3 percent and Jakarta dived 1.1 percent.

Manila and Wellington were also lower.

In early European trade London dipped 0.1 percent and Paris eased 0.2 percent but Frankfurt rose 0.2 percent.

Expectations that the massive reduction in corporate taxes would fuel the surge in equities. But forex traders are more reticent about the effect on the economy.

Bitcoin dives

“After all is said and done doubts about the overall economic impact from the US tax bill capped the dollar gains, as the dollar sold off versus the yen and held losses against the euro after the House approved the bill,” said Stephen Innes, head of Asia

“Currency traders continue to think the economic bump will be small while there’s increasing chatter that the markets have likely overemphasized the impact of tax dollar narrative.”

Bitcoin plunged around 15 percent Wednesday on news that an exchange in South Korea — where many cryptocurrency traders live — had gone bust.

The unit, which hit a record $19,500 at the start of the week, took a hit as it emerged that Youbit had it would close and enter bankruptcy.

Also on Tuesday US authorities suspended trading in a popular Bitcoin-related stock, citing concerns about market manipulation. The Crypto Company’s share price had risen 1,700 percent between the end of September and Monday evening before the Securities and Exchange Commission intervened to halt trades until January 4.

“Both the news of South Korea’s exchange having been hacked and position adjustment following recent rallies affected the market today,” Raita Yamaguchi, senior consultant at Nomura Research Institute, told AFP.

Bitcoin has soared almost 30-fold since the start of the year and this month saw it move into the mainstream as two major US exchanges began trading futures in the unit.