Asia stocks extend global rally, eyes on US tax plan

Hong Kong: Asian stock markets rallied on Wednesday for a fourth day following another record close on Wall Street, with investors optimistic before President Donald Trump’s promised announcement of much-vaunted tax reforms.
After shooting out of the blocks Monday in response to Emmanuel Macron’s election triumph in France’s election first round, trading floors remain buoyant thanks to a strong start to the US earnings season and Trump’s expected stimulus.
The positive sentiment has also been boosted by a slight easing of tensions over North Korea and hopes a feared shutdown of the US government can be averted, after the president appeared to soften his stance on congressional funding for his Mexican border wall.
Optimism, at a premium for the past few weeks — owing to geopolitical tensions and Trump’s failure to push through key legislation — is swirling around markets again, sending the safe-haven yen lower and thus boosting Japanese stocks. Tokyo’s Nikkei ended up 1.1 per cent
Hong Kong shares rose to their highest level in over a month on Wednesday, in line with gains in most other Asian markets, supported by improved risk appetite and an overnight rally on Wall Street.
A further rebound in mainland China stocks also buoyed investors’ confidence.
The Hang Seng index rose 0.5 per cent to 24,578.43 points, the highest level since March 21, while the China Enterprises Index gained 0.4 per cent to 10,317.63.
Financials led the Hong Kong market higher as fund managers bet that banks’ balance sheets will improve along with the global economy and on views that the sector’s share valuations remain attractive.
An index tracking the financial sector rose 0.8 per cent on Wednesday.
The services sector was also among the top winners, rising 1.9 per cent.
Shanghai edged up 0.2 per cent, extending the previous day’s advance after suffering a sell-off in recent weeks on concerns about a government crackdown on leveraged investments.
Sydney finished 0.7 per cent higher while Seoul jumped 0.5 per cent. Wellington surged 1.6 per cent and there were also gains in Singapore, Taipei and Jakarta.
“Confidence has returned and the yen has fallen back in value,” Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney, told Bloomberg News. “Markets seem a lot more relaxed. Globally, we’re seeing a lot of risk-on.”
In early European trade London dipped 0.1 per cent, Paris lost 0.3 per cent and Frankfurt was flat.
Asian traders were given a strong lead from Wall Street, where the Nasdaq broke through the 6,000 marker for the first time and the Dow jumped more than one per cent on strong earnings reports.
Attention now turns to Washington where the White House will unveil its long-awaited tax reforms, with speculation of huge cuts in personal and corporation tax. The policy, along with plans to boost infrastructure spending and slash red tape, were among the key drivers of a global markets rally that followed Trump’s November election win.
The bill comes weeks after the tycoon’s planned healthcare reforms fell at the first hurdle as his own Republican colleagues failed to agree, throwing his whole agenda into doubt.
On currency markets the euro built on this week’s gains on reports the European Central Bank could start to wind down its monetary easing programme as euro zone economies continue to improve.
However, the Canadian dollar held up in Asia after tumbling more than one per cent Tuesday in response to Washington imposing a 20 per cent tariff on softwood lumber imports.
Analysts said the move could be seen as a litmus test of Trump’s protectionist policies, which he touted so often during the election campaign. — AFP