Asian markets fluctuate as dealers assess Trump

Asian markets were hit by fresh volatility on Thursday (Nov 17) as uncertainty permeates trading floors after Donald Trump’s shock election win, while the dollar pushed back up on expectations of a US interest rate hike.

Investors have been struggling to ascertain the outlook for the global economy under a Trump presidency after his bellicose rhetoric regarding trade agreements and spending plans that could ramp up inflation – and borrowing costs – at home.

While a surge in the dollar against the yen has sent Tokyo’s Nikkei to nine-month highs, emerging market bourses and currencies have been hit with an outflow of foreign cash as traders bet on better returns in the United States.

The Nikkei ended flat while Hong Kong edged down 0.1 per cent and Sydney gained 0.2 per cent.

Shanghai was 0.1 per cent higher, Seoul added 0.1 per cent and Jakarta rose 0.2 per cent, while Kuala Lumpur dipped 0.1 per cent. However, Manila gained 1.2 per cent after data showed the Philippines’ economy grew more than expected in July-September.

In early European trade London added 0.1 per cent but Paris and Frankfurt each fell 0.2 per cent.

“Asian markets have been lacking conviction this afternoon,” Gary Huxtable, client advisor at Atlantic Pacific Securities in Australia, said in a note.

The fluctuations came after a tepid lead from Wall Street, where the Dow fell from a record high after a seven-day winning run.

‘HIKE GUARANTEED’

Attention now turns to Federal Reserve boss Janet Yellen’s testimony to congress later in the day, with traders poring over her comments hoping she will provide some idea about the bank’s monetary policy in light of Trump’s win.

Markets had largely expected the Fed to lift rates next month and then gradually through next year. But analysts say that if Trump follows through with pledges to boost spending and cut taxes, inflation could rocket, forcing the Fed to act.

“A December rate hike is almost guaranteed,” James Woods, global investment analyst at Rivkin Securities in Sydney, said in an email to clients. “What will be important will be any revisions to future hike projections.”

The dollar is heading towards the ¥110 mark for the first time since June and is also at a near one-year high on the euro.

But emerging market currencies are under pressure, hit by a flood of cash out searching for better, safer returns as well as worries about Trump’s protectionist views that could see him throw up huge tariffs to the world’s number-one economy.

Indonesia’s rupiah, the South Korean won and Malaysian ringgit were all down against the dollar Thursday.

In China the country’s central bank lowered the yuan fixing to the dollar for the 10th straight session to 6.8692, down 0.15 per cent from the previous day, marking its lowest level since June 2008.

On oil markets, traders were waiting to see if the OPEC producers cartel could hammer out a deal to cut crude output.

The commodity surged this week on news the group and Russia were pushing for an agreement before its twice-yearly meeting on Nov 30.

– Key figures around 0800 GMT –

Tokyo – Nikkei 225: FLAT at 17,862.63 (close)

Hong Kong – Hang Seng: DOWN 0.1 per cent at 22,262.88 (close)

Shanghai – Composite: UP 0.1 per cent at 3,208.45 (close)

London – FTSE 100: UP 0.1 per cent at 6,756.60

Euro/dollar: UP at US$1.0700 from US$1.0688 Wednesday

Dollar/yen: UP at ¥109.10 from ¥109.09

Pound/dollar: UP at US$1.2462 from US$1.2441

Oil – West Texas Intermediate: DOWN 18 cents at US$45.39 per barrel

Oil – Brent North Sea: DOWN 20 cents at US$46.43

New York – Dow: DOWN 0.3 per cent at 18,868.14 (close)

Courtesy : channelnewsasia