Asia stocks trade higher as investors target details on Trump’s tax reform schemes

Big 5

Asian markets traded mostly higher on Monday, as investors await further details from U.S. Pesident Donald Trump on his economic policies, including tax reforms.

Japan’s Nikkei 225 index was nearly flat at 19,241.16, reversing earlier losses of nearly 0.6 percent as the yen weakened against the dollar to trade at 113.03, falling from an earlier high of 112.75, but remained stronger than levels below 114.4 in the previous week.

A stronger yen generally weighs on export-oriented stocks in Japan as it affects their overseas profit margins when funds are converted to the local currency.

Earlier, Japan said exports rose 1.3 percent in January from a year earlier, Reuters reported, showing a slowdown from the previous month due to a decline in exports to the U.S. and the Lunar New Year holidays, coming in well below the 4.7 percent increase forecast by economists.

The trade balance came to a deficit of 1.09 trillion yen ($9.66 billion), compared with the median estimate at 636.8 billion yens’ deficit.

Among exporters, Toyota climbed 0.28 percent, Sony fell 1.21 percent, Honda was off 0.2 percent and Canon shed 0.30 percent.

SoftBank shares added 2.93 percent after Reuters reported the company was willing to give up control of Sprint to T-Mobile U.S. to secure a merger between the two telecoms.

Across the Korean Strait, South Korea’s Kospi index also traded nearly flat at 2,081.62. In Hong Kong, the Hang Seng index was up 0.33 percent, while Chinese mainland shares also advanced.

The Shanghai composite gained 0.79 percent, while the Shenzhen composite was up 0.33 percent.

Australia’s shares fell, with the ASX 200 down 0.28 percent, with most sectors lower. The energy sector was down 1.32 percent, while industrials fell 2.05 percent and the heavily-weighted financial sector gained 0.21 percent.

WorleyParsons shares dropped 12.78 percent after the company reported a fiscal first-half net loss of 2.4 million Australian dollars, compared with a profit of A$23.1 million in the year-earlier period.

The modest market movements in the region echoed Wall Street’s performance on Friday.

” Trump promised a ‘phenomenal’ tax announcement in 2-3 weeks, so as the clock ticks down to some form of announcement, market inertia is set to reign,” said Ray Attrill, global co-head of foreign exchange strategy at the National Australia Bank, in a note.

Attrill said that was the impression markets conveyed on Friday, but also acknowledged the absence of market-moving data.

“U.S. equities recouped early session losses to end Friday slightly in the black and the U.S. dollar tracked equities higher despite a fall in U.S. yields,” Attrill further added.

U.S. markets are closed on Monday for a public holiday.

Mizuho Bank’s Vishnu Varathan said markets were grappling with what he called the Donald Disconnect- which he defined as bets on economic rebound without accompanying reflations.

The optimism in markets, Varathan said, was driven by expectations of tax reforms, deregulation and infrastructure capex, which fueled equity markets but did not invoke higher U.S. yields and an accompanying surge in the dollar.

On Monday afternoon at 1:04 p.m. HK/SIN, the dollar index, which measures the greenback against a basket of currencies, traded at 100.88, up from levels around 100.62 from Friday afternoon Asia time.

Meanwhile, the Australian dollar traded at $0.7675, while the euro was at $1.0615.

Source: CNBC