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Asian Stocks Mixed, Glued to White House

Asian Stocks Mixed, Glued to White House

2017-01-24 08:38:00
David Cottle, Analyst
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Talking Points:

  • Asian markets were all about Trump for yet another session
  • US Dollar weakness and worries about White Houser trade policy continued to weigh
  • Gloom wasn’t universal however as Australian shares ticked up

Asian stocks were mixed again on Tuesday while the US Dollar remained heavy. Once again, the backdrop was one of uncertainty over President Trump’s economic policies, with the foreground spiced by his withdrawal of the US from the Trans Pacific Partnership trade deal.

Trump had promised to pull the US out on the campaign trail, saying that to do so would secure and protect American jobs. The TPP was a cornerstone of Barack Obama’s geopolitical thinking and a big part of his so-called “pivot to Asia.”

Judging by Japanese official comment, Japan is dismayed at the new Administration’s attitude to TPP but is still hopeful – for public consumption at least – that Trump can be talked around. Other TPP members have made similar noises but the deal is hugely undermined by the loss of its biggest member state.

The Japanese Yen continued to gain against a generally weaker US Dollar. The Nikkei doesn’t usually like this, and didn’t this time, falling 0.4% by mid-afternoon and extending Monday’s falls. This was despite a rather punchy report from the Japanese manufacturing sector which passed Trump-fixated markets by. The Australian ASX benchmark had a better session: it was up 0.7%. Here strength in its vast raw materials sector was a vital prop. Base-metal prices were stronger, thanks to that weaker US Dollar and continuing hopes that a Trump White House will spend big on infrastructure.

Mainland Chinese shares were mixed in trade which seems to be thinning as the long Chinese New Year celebrations approach. Shanghai was down 0.8%, Shenzhen fell 0.2%. Hong Kong’s Hang Seng rose 0.4%.

The greenback continued to slide against all major rivals as markets nervously eyed a more protectionist US and what that might mean for the currency. The British Pound just managed to keep a stiff upper lip, with GBP/USD up around 1.25. This was despite Tuesday’s UK Supreme Court decision on who can fire the Brexit starting gun. The government of Prime Minister Theresa May is expected to lose its appeal against use of reserve powers to trigger Article 50 of the Treaty of Lisbon, which would officially start the Brexit process.

However, if it does, the question will be just how protracted the political preamble to invocation will be. In short, there is plenty of Sterling risk about on Tuesday.

Elsewhere, crude oil prices continued to creep higher, buoyed by hopes that production cuts will hold.

The British Pound’s nervy Tuesday, so far…

Asian Stocks Mixed, Glued to White House

Chart compiled using TradingView

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--- 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.

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