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Asian Stocks Gain, Currencies Await Trump

Asian Stocks Gain, Currencies Await Trump

David Cottle, Analyst


Talking Points

  • Asian investors bid stocks higher on Wednesday
  • FX markets seemed to have only one thing on their minds however
  • President-elect Trump will meet the press later, after local markets close

Asian stocks were mostly in the black on Wednesday but currency trading was perhaps surprisingly subdued as investors looked to the first full press conference from US President-elect Donald Trump, which will come after the markets here close.

Australian shares got a lift from the raw-materials sector, with gains of between three and four percent for the big-name miners. There was no obvious new catalyst for this but rises in London industrial-metal prices on Tuesday – probably in response to much stronger factory-gate inflation in China – may have done the trick.

In Tokyo, the Nikkei got a bit of a lift as the US Dollar edged higher on the Japanese Yen. There was also some good news from the Japanese economy late in the session as both the national leading and coincident indexes were revealed to have risen to their highs for 2016 in November.

Stock and currency markets seemed to shrug off the cruise of China’s only aircraft carrier and a fleet of support ships through the Taiwan Strait, on return from an exercise. Taipei reportedly scrambled aircraft to “surveil” the ships, but said that they had not entered its territorial waters.

Currency markets were more torpid than their equity counterparts. The US Dollar generally inched higher against the majors, with USD/JPY apparently set to buck the last two days of losses. But investor focus seemed to be firmly on the US President-elect. Markets have been clamouring for more policy detail from Mr. Trump, and even though they are unlikely to get more than broad strokes at best from the man himself later Wednesday, it seems that this prospect is enough to keep hands off trading keyboards.

USD/JPY gained, then meandered as investors looked to the US

Chart compiled using TradingView

In the months since his shock election victory, the expectation that he is the man for massive US fiscal spending has seen stocks surge to record highs stateside and elsewhere while the greenback climbed to levels not seen for over a year. Any clues as to how justified these moves might have been are clearly gold dust.

The British Pound continued to struggle, as it has all week in the wake of rising “hard Brexit” worries, but it looks comfortable enough above $1.21 at present. The day ahead will bring plenty of UK economic information, most notably official manufacturing figures for November. These might now look a bit too historic given events since. Still, signs that a weaker currency is helping the industrial sector might give the battered UK unit some respite.

Crude oil prices remained under pressure as doubts appeared to grow over the extent to which production cuts will lead to real falls in overall supply.

Would you like to know more about financial-market trading? The DailyFX webinars page is a great place to start.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.