Asia report: Japan posts stunning recovery while NZ cuts rates

Asian markets posted a stunning recovery on Thursday, after plummeting in the face of a Donald Trump victory in the US presidential election on Wednesday, as investors reassessed just what the Republican victor means for the markets.

In Japan, the Nikkei 225 completely reversed Wednesday’s losses, adding 6.72% to 17,344.42, with the safe haven yen weakening against the dollar.

It was last 1.02% weaker against the greenback at JPY 106.75 per $1.

On the mainland, the Shanghai Composite added 1.36% to finish at 3,170.92, while the Shenzhen Composite finished up 1.37% at 2,096.89.

A Trump win and a weaker yuan pushed up a number of construction and infrastructure companies in the People’s Republic, with China Communications Construction up 6.86%, Sany Heavy ahead 3.11% and Zoomlion Heavy Industries 4.62% firmer.

South Korea’s Kospi was ahead 2.26% at 2,002.60, while Hong Kong’s Hang Seng Index was up 1.89% at 22,839.11.

“US yields surged higher on the back of expected increased fiscal spending by Trump,” noted easyMarkets chief market strategist Anthony Darvall.

“This has helped the dollar rally sharply against other currencies but especially the low yielding yen and the euro.”

Oil prices were up during Asian trading, recovering from earlier losses in the US session.

Brent crude was last up 0.56% at $46.82, though West Texas Intermediate started to slip as European hours took over, and was last off 0.24% at $45.16.

Australia’s S&P/ASX 200 added 3.34% to 5,328.80, with the energy and materials subindexes boosting the benchmark, finishing up 3.29% and 5.75% respectively.

The gold subindex, representing the safe haven metal which surged on Wednesday, was off 4.82%.

In New Zealand, the S&P/NZX 50 added 1.04% to finish at 6,733.72.

Before markets opened, the Reserve Bank of New Zealand cut the country’s official cash rate by 25 basis points to a record low of 1.75% - the first time the rate has been below 2%.

Graeme Wheeler, governor of the island nation’s central bank, warned of “numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.”

In its statement, the RBNZ did remove previous references to the need for further cuts, however, suggesting it was happy with the current level for the time being.

The down under dollars were mixed, with the Aussie last 0.99% ahead at AUD 1.2966 against the greenback, but the Kiwi weakening 0.38% as a result of the rate cut, to last settle at NZD 1.3790 per $1.