Asian markets extend global rally on Trump relief

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.

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.

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)