HONG KONG: Most Asian markets turned higher Wednesday as investors tracked another record on Wall Street and refocused on the global economy after two deadly attacks.
The Berlin Christmas market horror and shooting of Russia’s Turkish ambassador fanned concerns that fresh geopolitical woes could upend a rally in world assets triggered by Donald Trump’s election as US president.
But the fear did not filter through to Europe and New York, where the Dow got within striking distance of the 20,000 mark for the first time.
“Noteworthy is the resilience of equity markets and low volatility in the face of two horrific terrorist attacks in Europe,” Jason Wong, a currency strategist at Bank of New Zealand in Wellington, wrote in a note to clients Wednesday.
“They seem to have had little impact on the market,” he said, according to Bloomberg News.
Hong Kong added 0.6 percent in the afternoon after suffering a four-day sell-off, while Shanghai jumped 1.1 percent higher and Sydney put on 0.4 percent.
Wellington and Singapore each put on 0.2 percent while there were also advances in Manila, Jakarta and Kuala Lumpur.
But in Tokyo the Nikkei ended down 0.2 percent, having risen for 10 percent in the previous 11 sessions.
– Hawkish Yellen –
World markets have been on the rise since Trump’s November 8 election as dealers bet his plans for big state infrastructure spending, tax cuts and deregulation will fire the US economy, the world’s largest and a key driver of world growth.
There are also widespread expectations that his policies will fire inflation, forcing the Federal Reserve to hike borrowing costs. And last week the central bank said it foresaw three increases next year, surprising markets that had expected just two.
The Fed’s bullish outlook has pushed the dollar ever higher, sitting at 10-month highs against the yen and heading towards parity with the euro for the first time since 2002.
However, early gains against both units on Wednesday were pared by profit-taking, while the greenback was also slightly lower against most higher-yielding currencies including the Australian dollar, Indonesian rupiah and Thai baht.
Despite the selling, comments from Fed boss Janet Yellen this week that the US jobs market was at its strongest since before the financial crisis provided upside support for the greenback.
“She didn’t step back from the hawkishness of last week’s Fed,” Greg McKenna, chief strategist at CFD and FX provider AxiTrader, said in a note.
“It’s reinforced policy divergence to forex traders and strengthened the US dollar. But it hasn’t hurt stocks because traders are focused on the economic strength.”
– Key figures around 0700 GMT –
Tokyo – Nikkei 225: DOWN 0.3 percent at 19,444.49 (close)
Hong Kong – Hang Seng: UP 0.6 percent at 21,861.20
Shanghai – Composite: UP 1.1 percent at 3,137.43 (close)
Euro/dollar: UP at $1.0406 from $1.0390
Dollar/yen: DOWN at 117.56 yen from 117.83 yen
Pound/dollar: UP at $1.2370 from $1.2367
Oil – West Texas Intermediate: UP 27 cents at $53.57 per barrel
Oil – Brent North Sea: UP 25 cents at $55.60
New York – Dow: UP 0.5 percent at 19,974.62 (close)
London – FTSE 100: UP 0.4 percent at 7,043.96 (close)
