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Asia markets, dollar rally as dealers welcome Yellen

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Hong Kong: The dollar extended gains and most Asian markets resumed their rally on Wednesday as traders cheered upbeat remarks on the US economy by Federal Reserve boss Janet Yellen.


Wall Street hit record highs for a fourth successive day as Yellen reinforced the view that the world’s top economy was in rude health, with the jobs market improving and inflation heading to the Fed’s two per cent target. She confirmed the next rate rise could come at any time, which leaves open the possibility of a move at the Fed’s March 14-15 policy meeting.


Her remarks, in the first of two days of testimony to Congress, helped drag US markets out of a morning slumber and reinvigorated the greenback against most of its peers.


“The US dollar was on the back foot during the Asian trade (Tuesday), but it got that boost from Yellen, so it will be on a stronger position (Wednesday),” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.


“She said rates need to rise. That’s important because to wait is to risk having to overreact and then knock the economy — and markets — for six.”


In Tokyo the dollar was at 114.35 yen from 114.27 yen in New York and well up from the 113.40 yen earlier in Asia. The pound and euro were sharply down from their levels in Asia on Tuesday.


Higher-risk currencies retreated, with Australia’s dollar, the South Korean won, Malaysian ringgit and New Zealand dollar all well down.


Equity markets tracked the US surge. Tokyo shot up one per cent as the weaker yen helped exporters, while Hong Kong added 1.2 per cent.


Sydney ended up 0.9 per cent, Seoul gained 0.5 per cent and Singapore was up 0.4 per cent. Wellington and Taipei also advanced.


China stocks reversed earlier gains to end lower on Wednesday, as technology and resource stocks took a breather after their recent strong rally.


The blue-chip CSI300 index fell 0.4 per cent, to 3,421.71 points, while the Shanghai Composite Index shed 0.2 per cent to 3,212.99 points.


Most sectors retreated, led by materials and industrial stocks.


The tech-heavy start-up index ChiNext lost 0.9 per cent in its biggest fall since January 24. However, bank stocks gained 1 per cent as some large Chinese joint-stock banks and local commercial banks were reported to be involved in the second batch of non-performing asset securitisation.


The Shanghai SOEs Index also gained 1.8 per cent after news that Shanghai State-owned Enterprises Work Conference would be held on Thursday, which was expected to set the course for this year’s reform.


Golden Dragon slumped 7.9 per cent to a near one-month low, after the company said it is being probed for suspected bribery.


The broad advance extends a rally that began last week when President Donald Trump promised details of “phenomenal” tax reforms, raising hopes he will also honour other election promises of massive infrastructure spending and deregulation.


“In principle, the Trump rally continues,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities.


 — AFP


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