Asian markets pressed ahead with a global rally on Monday following 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, reports BSS.
That was followed by his reaffirmation that he recognizes Beijing’s “One China” policy towards Taiwan and a positive weekend meeting with Japanese Prime Minister Shinzo Abe.
The developments fuelled some much-needed relief 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.
Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a note that the “apparently more conciliatory president Trump… added to the positive sentiment”.
He added: “Looking at the stock market rally specifically it’s worth noting that psychology is important in markets and it’s clear traders still want to believe in Donald Trump.”
Japan’s Nikkei ended the morning 0.5 percent higher as a weaker yen continued to support the country’s exporters. There was little excitement over data showing the Japanese economy grew one percent last year and enjoyed its longest run of expansion since 2013.
Hong Kong was up 0.2 percent, Shanghai added 0.4 percent and Sydney put on 0.6 percent. Seoul was marginally higher while Singapore, Taipei, Manila and Wellington also posted healthy gains.
Attention now turns to Federal Reserve boss Janet Yellen’s two-day testimony to Congress this week, which will be pored over for clues about the bank’s plans for monetary policy. Oil prices retreated Monday after surging at the end of last week in response to the International Energy Agency saying that OPEC countries are broadly complying with a deal to reduce output and address a global glut.
The increase in demand for riskier assets also weighed on gold, which is considered a safe bet in times of turmoil. The precious metal dipped 0.3 percent to $1,230 Monday and is well off the levels around $1,245 on Thursday.
