Asia report: Most markets higher on US tax reform hope

Most markets in Asia finished higher on Monday, as investors placed their chips in favour of US tax reform proceeding after a strong finish from Wall Street on Friday.

In Japan, the Nikkei 225 was up 1.55% at 22,901.77, as the yen strengthened 0.07% against the dollar to last trade at JPY 112.52.

Banks, carmakers, technology stocks and banks all saw gains in Tokyo, while a number of construction stocks slipped.

SoftBank finished up 1.67% and Sony added 3.1%, with Toyota climbing 2.81%.

On the data front, exports from Japan were above expectations in November at 16.2% growth year-on-year, compared to the Reuters-polled forecast for 14.6%.

It was the 12th month in a row for export growth in the country.

On the mainland, the Shanghai Composite eked out gains of 0.07% to 3,268.33, while the smaller, technology-heavy Shenzhen Composite lost 0.64% to close at 1,889.13.

The People’s Bank of China upped its 14-day reverse repo rate by five basis points on Monday, to 2.65%, following its increase of the seven-day and 28-day repo rates and its medium-term lending facility rate by the same amount last week.

Its increases last week were seen as a direct response to the Federal Reserve’s decision to lift its interest rate targets in the US.

On the data front in China, new house prices were up 0.3% month-on-month in November and 5.1% year-on-year.

South Korea’s Kospi also went against the regional trend, finishing down 0.01% to 2,481.88, while the Hang Seng Index in Hong Kong added 0.7% to 29,050.41.

Samsung was ahead 1.15% in Seoul, while steelmakers were on the back foot, with Hyundai Steel off 4.68% and Posco finishing down 2.25%.

Carmakers were little changed, as a union dispute between Hyundai and workers at its Ulsan factories continued.

The workers were on strike on Monday and Tuesday, after the union claimed the company had failed to meet their wage improvement demands.

Much focus was on the US, after Republicans released their final tax plan on Friday as two of the party’s senators came around in support of the bill after winning concessions.

The final plan would see the federal corporate tax rate be slashed to 21% from its current 35% from 2018, with Republicans planning to pass the bill by the middle of the week.

Oil prices were higher, with Brent crude last up 0.33% at $633.44 per barrel and West Texas Intermediate rising 0.42% to $57.54.

In Australia, the S&P/ASX 200 rose 0.7% to settle at 6,038.90, with the hefty financials subindex and the major miners underpinning its performance.

Fortescue Metals was up 0.82% and Rio Tinto rose 1.22% in Sydney.

Among the big banks, Australia and New Zealand Banking Group was ahead 2.13% after it announced an AUD 1.5bn share buyback.

Across the Tasman Sea, the S&P/NZX 50 fell 0.2% to 8,344.15, led lower by flag carrier Air New Zealand, which was off 3.8%.

Energy suppliers were also lower, with Contact Energy falling 3.6% and Mercury down 3.2%.

The down under dollars were both stronger on the greenback, with the Kiwi ahead 0.23% at NZD 1.4274 and the Aussie gaining 0.24% to AUD 1.3049.