Asia report: Markets higher as greenback continues to sink

Markets in Asia finished positive on Wednesday, with markets reacting to a weakened dollar, which hit 10 month lows overnight amid ongoing concerns for President Trump’s reform programme in the US.

In Japan, the Nikkei 225 was up 0.1% at 20,020.86, as the yen strengthened against the greenback, last advancing 0.06% to JPY 112.00.

Petroleum company Idemitsu Kosan confirmed it was issuing 48 million shares, after a court rejected an attempt by the company’s founding Idemitsu family to prevent the offer taking place.

The family disagreed with management plans to acquire Showa Shell Sekiyu, with the share issue being seen as a way to dilute the family’s influence and thus their ability to block the acquisition.

Shares in Idemitsu Kosan were up 1.97% in Tokyo.

The Bank of Japan headed into the meeting room on Wednesday, for its two-day policy session.

On the mainland, the Shanghai Composite was up 1.42% at 3,232.87, and the smaller tech-heavy Shenzhen Composite was up 1.53% to 1,839.06.

South Korea’s Kospi was up 0.16% at 2,429.94, and the Hang Seng Index in Hong Kong was up 0.56% at 26,672.16.

The positive sentiment in the region was driven by a number of outside factors, including earnings season in the US, where around 80 of the S&P 500 companies which have reported beating their bottom line forecasts.

US President Donald Trump’s reform plans were also in the spotlight globally, after his plans to repeal and replace Barack Obama’s legacy healthcare legislation collapsing on Monday amid criticism ‘Trumpcare’ would leave thousands of America’s poorest without access to basic healthcare.

The president said he would prefer to “let Obamacare fail” in the wake of his plan’s collapse.

But the collapse was also leading to questions across the world over the Trump administration’s ability to enact reform, with doubt growing over whether his promised business-friendly tax reform could be enacted as planned.

“The failure in the Senate to modify Obamacare followed immediately by a failure to cancel it outright are but the latest miscues suggesting a four-year lame duck presidency,” noted analysts at DBS.

“Reform, deregulation and fiscal stimulus that excited markets seven months ago are becoming evermore distant memories and expectations for GDP growth and Fed action are falling accordingly.”

Locally, investors were also still reacting to the buoyant Chinese economic data released on Monday, after a delayed reaction in Shanghai earlier in the week as traders were focussed on regulation events over the weekend.

Oil prices were lower during Asian trading, although they picked up again during early European hours, with Brent crude last up 0.45% at $49.06 per barrel and West Texas Intermediate ahead 0.26% at $46.52.

Australia’s S&P/ASX 200 finished 0.79% firmer at 5,732.13, with the weighty financials subindex underpinning the benchmark, adding 2.44%.

The major regional banks were mostly higher, with Australia and New Zealand Banking Group up 3.92%, National Australia Bank growing 3.06% and Westpac Banking Corporation ahead 3.8%.

It came after regulators confirmed the capital requirement for the ‘big four’ banks - the abovementioned three, plus Commonwealth Bank of Australia - would be increased before 2020.

Major miner Rio Tinto was also near the top of the agenda in Sydney, as analysts suggested the company’s 2017 dividend could be the highest in the firm’s history as iron ore prices soared.

Rio Tinto had lowered its guidance for iron ore exports on Tuesday, however.

Across the Tasman Sea, the S&P/NZX 50 increased 0.2% to a fresh record high of 7,725.77, also led by dual-listed stocks of the big four regional banks.

New Zealand shares in Westpac were up 4% in Wellington, while Australia and New Zealand Banking Group was ahead 3.9%.

The weaker greenback led to a surge in both of the down under dollars, with the Aussie last ahead 0.21% to AUD 1.2605 and the Kiwi advancing 0.26% to NZD 1.3572.