Asia report: Trump's 'phenomenal' tax plan lifts most markets

Markets in Asia finished higher in Friday, taking their lead from the US markets overnight, which rose after US President Donald Trump described his upcoming tax policy as “phenomenal”.

Japan’s Nikkei 225 surged 2.49% to finish the week at 19,378.93, with a weaker yen helping to lift domestic stocks.

Investors in the country were now looking at Prime Minister Shinzo Abe’s trip to visit Donald Trump in Washington for a two-day summit.

“This meeting takes place amid concerns in Japan about what the Trump administration's ‘America First’ construct means for US foreign policy in Asia, as well as the implications of Trump's formal withdrawal from the Trans-Pacific Partnership for bilateral economic ties,” noted experts at the Center for Strategic and International Studies earlier in the week.

The yen was last 0.21% weaker against the greenback, at JPY 113.49 per $1.

On the mainland, the Shanghai Composite was 0.44% higher at 3,197.44, while the Shenzhen Composite was 0.22% softer at 1,950.32.

Trade figures in China exceeded expectations, new data revealed, with exports growing 7.9% year-on-year in January, with imports rising 16.7%, denominated in dollars.

When measured in renminbi, exports were up 15.9% and imports surged 25.2% year-on-year, with China’s trade surplus for the month sitting at $51.35bn.

A number of infrastructure companies were higher on Friday, after the Ministry of Commerce confirmed it was pushing the ‘One Belt, One Road’ infrastructure initiative along the Silk Road economic belt, with its neighbours.

Bellwether China Communications Construction was up 5.42%, China Gezhouba finished 5.64% higher, and China Railway Construction was 2.7% firmer.

Chinese President Xi Jinping spoke with his US counterpart over the phone for the first time on Friday, with Trump reportedly agreeing to stick with the ‘One China’ policy of the People’s Republic, which asserts the larger of the two Chinas is the only one with legitimacy.

It gave some clarity to The Donald’s stance on the Taiwan question, after he spoke on the phone with Taiwanese leader Tsai Ing-wen in December.

It was the first known phone call between US and Taiwan leaders since Washington severed ties with Taipei at the behest of Beijing.

South Korea’s Kospi finished 0.45% higher at 2,075.08, while the Hang Seng Index was 0.21% higher at 23,574.98.

“Lowering the overall tax burden on American business is big league,” the President said on Thursday, adding “that's coming along very well.”

He said his team was ahead of schedule on the policy, and would announce a plan in the next two or three weeks “that will be phenomenal in terms of tax”.

That sent the markets into the green for the first time in a few days, with all three major New York indices adding just under 0.6% for the session.

“After backsliding for all of the last week, the Trump-reflation trades are suddenly back on again, all stemming from the President's promise of a 'phenomenal' tax plan to be released within 2-3 weeks,” noted analysts at Macquarie on Friday.

Oil prices were higher during Asian trading on Friday, though they bounced back during early European hours, with Brent crude last up 0.93% at $56.15 and West Texas Intermediate ading 0.81% at $53.43 per barrel.

Australia’s S&P/ASX 200 was 0.99% higher at 5,720.16, with all eyes on the Reserve Bank of Australia as it released its latest meeting minutes,.

It slashed its near-term growth forecasts for the domestic economy, after a third-quarter contraction surprised policymakers and investors.

The central bank did, however, expect things to rebound within the next two years, meaning additional rate cuts were not seen as likely at this stage.

Australia’s official cash rate was held steady at a record low 1.5% on Tuesday, which the markets had expected.

In New Zealand, the S&P/NZX 50 finished down 0.2% at 7,104.44, led lower by broadband infrastructure owner Chorus, which lost 3.6%.

Plans were unveiled by the country’s Communications Minister Simon Bridges during the day, to deregulate the Chorus copper network in areas where it competes with fibre optic networks from 2020.

It was a mixed bag for the down under dollars again, with the Aussie last 0.25% stronger at AUD 1.3082 against the greenback and the Kiwi weakening 0.07% to NZD 1.3924 per $1.