HONG KONG: Japanese stocks extended their recent rally Monday as the dollar consolidated its gains against the yen with investors betting on a US interest rate hike next month.
However, other markets continued to struggle with uncertainty over the impact of a Trump presidency.
The greenback has soared to five-month highs against the yen since Donald Trump’s election win on a platform of huge infrastructure spending and tax cuts that experts say will fan inflation and force the Federal Reserve to lift rates.
That has in turn provided a boon for Japan’s exporters as it makes their goods cheaper overseas and boosts repatriated profits.
The dollar was at 110.82 yen in early Japanese trade, levels not seen since June, while the Nikkei stock index climbed 0.5 percent by the break to its highest level since January
However, Chris Weston, chief market strategist in Melbourne at IG Ltd, told Bloomberg News: “We have seen some monster moves over the past two weeks on Fed expectations, and I think that can’t go on for much longer.
“I wouldn’t be surprised to see a little bit of pause as investors take a break to catch their breath, and these Asian markets may take a little breather as well and see some consolidation, whether its been falling or rallying.”
Most major markets turned higher but concerns that the Fed will lift rates faster next year that previously thought has caused concerns among traders.
Hong Kong was up 0.5 percent and Shanghai added 0.8 percent while Sydney and Seoul were flat.
However, other bourses continue to struggle as investors remove their cash with the prospect of better, safer returns in the US.
Manila lost 0.6 percent and Jakarta fell 0.5 percent, while Singapore and Wellington each slipped 0.1 percent.
Oil prices built on Friday’s gains after Russia and Iran expressed optimism a deal can be agreed between OPEC and other major producers on cutting output.
Jeffrey Halley, senior market analyst at OANDA, said: “As we enter the final lap of a tortuous OPEC process, with (the group’s twice-yearly meeting on) 30th November finally in sight, expect oil prices to be driven by whatever comments unofficial or official, are coming from them and Russia.”
