Asian markets extend global rally on Trump relief

PHOTO: The Straits Times

HONG KONG - Asian markets built on 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.

That was followed by his affirmation 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 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.

"This is a big relief for investors given that Trump's previous stance had raised serious foreign policy concerns, not to mention the prospect of severely damaged trade ties with the region and increased protectionism," said Craig Erlam, senior market analyst at OANDA trading group.

Things Singapore investors need to know after Trump's win

  • Donald Trump (shockingly) won the US election. As far the financial markets are concerned, here are eight things that all Singapore investors should know about.
  • 1. Gold price is going up: Trump's victory has already seen a flight towards gold, as investors seek safe haven for their money.
  • 2. Uncertainty will cause sell-off, stock markets will drop: Investors, both institutional and retail, hate uncertainty, and that uncertainty is going to cause sell-off, leading to price drop across global equity markets.
  • 3. Panic leads to opportunity?: Remember the famous Warren Buffet quote, "be fearful when others are greedy, and greedy when others are fearful"? Well, you can now put this to the test.
  • 4. Watch the US Dollar close: While the popular sentiment is that the USD is going to depreciate as a result of Trump's victory in the short-run, the long-term performance of the USD is very much subjective still.
  • 5. Look out for local companies that deal heavily in US contracts: The uncertain future of the USD will be one to keep watch on, particularly for investors who own local stocks that have their contracts in USD.
  • 6. Bonds to be in demand again: With investors fearing that Trump's election will bring global uncertainty, prices of treasury bonds across the globe has seen a spike in price.
  • 7. High quality dividend stocks might be in play: There are many good local blue-chip companies that have been through recessions after recessions. They still continue to do well till today. Stick to them.
  • 8. Avoid panicking: The stock market is full of ups and downs, as it fluctuates largely based on human emotions.
  • We have already seen a shocking poll result earlier this year when the UK voted to exit the EU. As expected, markets sell-off were immediate. But life still have to go on. We still have to invest for our future and our retirement.

Adding to the positive atmosphere was a forecast-busting reading on Chinese trade, which raised hopes a growth slowdown in the world's number two economy could be bottoming out.

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 0.4 per cent higher as a weaker yen continued to support the country's exporters.

There was little excitement over data showing the Japanese economy grew one per cent last year and enjoyed its longest run of expansion since 2013.

Hong Kong was up 0.4 per cent in the afternoon while Shanghai ended up 0.6 per cent.

Sydney put on 0.7 per cent and Seoul added 0.2 per cent. Singapore, Taipei, Manila and Wellington also posted healthy gains.

Trump sworn in as 45th US president

  • President Donald Trump assumed power Friday with a fiercely nationalistic vow to put "America first," declaring a new political era after being sworn in as the 45th US head of state.
  • Hundreds of thousands of people stood in the rain-splattered National Mall to see the 70-year-old Republican billionaire take the oath of office and deliver a stridently populist call-to-arms.
  • Former US president Jimmy Carter and his wife Rosalynn arrive for the inauguration of President Trump.
  • Former US president Bill Clinton and former Secretary of State Hillary Clinton.
  • Former US President George W. Bush and his wife Laura.
  • Bush put up a struggle with his poncho.
  • American casino magnate Sheldon Adelson, a donor to the Trump campaign.
  • Senators Bernie Sanders and John McCain.
  • "From this day forward, a new vision will govern our land," Trump said, promising an end to business-as-usual in Washington.

    "From this moment on, it's going to be only America First."

  • "Today we are not merely transferring power from one administration to another or from one party to another, but we are transferring power from Washington, DC. And giving it back to you, the people."
  • While the US capital city no longer provides official crowd counts, the turnout was visibly smaller than for Barack Obama's two inaugurations, in 2009 and 2013, with sections of the Mall and bleachers along the parade route left empty.
  • And as the incoming leader rallied his supporters for the swearing-in, throngs of his opponents also converged on Washington.
  • Most of the protests - by an array of anti-racist, anti-war, feminist, LGBT, pro-immigration and marijuana legalization groups - were noisy but peaceful, though sporadic violence marred the day.
  • Between 400 and 500 masked, black-clad protesters carrying anarchist flags smashed windows, lit fires and scuffled with riot police in downtown Washington, blocks from the parade held in Trump's honour, with over 90 people arrested for vandalism.
  • Even the peaceful protesters were intent on spoiling Trump's party - letting out a deafening roar as the presidential limousine known as "The Beast" rolled by on the way to the White House.
  • "Not my president! Not my president!" they yelled, as the pro- Trump crowd in bleachers across the street chanted "USA! USA!".
  • Trump's inauguration caps the improbable rise to power of the Manhattan real estate magnate who has never before held elected office, served in government or in the armed forces.
  • His speech was far from the typical optimistic inaugural address that tries to bridge political divides and lift Americans' gaze up to the horizon.
  • It was a deliberate and striking contrast from the uplifting message of Obama, the outgoing president who was among the dignitaries in attendance.
  • Obama and his wife Michelle departed the Capitol by helicopter moments after the swearing-in ceremony, turning a page on eight years of Democratic leadership in the White House.
  • At a Congressional luncheon afterward, Trump led a standing ovation for his defeated election rival Hillary Clinton, saying he was "honoured" that she and her husband, former president Bill Clinton, attended his inauguration.
  • When Trump descended the escalators of his glitzy New York tower in June 2015, his run for office was roundly dismissed and even mocked.
  • Trump and First Lady Melania Trump dance during the Armed Forces ball at the National Building Museum.
  • Trump, the first lady Melania Trump, US Vice President Mike Pence and his wife Karen cut a cake after dancing at the Armed Services ball.

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 comments from the International Energy Agency, 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 per cent to $1,230 Monday and is well off the levels around $1,245 on Thursday.

Tokyo - Nikkei 225: UP 0.4 per cent at 19,459.15 (close)
Hong Kong - Hang Seng: UP 0.4 per cent at 23,673.75
Shanghai - Composite: UP 0.6 per cent at 3,126.84 (close)
Euro/dollar: DOWN at $1.0630 from $1.0638
Pound/dollar: UP at $1.2506 from $1.2485
Dollar/yen: UP at 113.70 yen from 113.25 yen
Oil - West Texas Intermediate: DOWN nine cents at $53.77 per barrel
Oil - Brent North Sea: DOWN five cents at $56.65
New York - Dow: UP 0.5 per cent at 20,269.37 (close)
London - FTSE 100: UP 0.4 per cent at 7,258.75 (close)

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