Asian markets soar, Nikkei rockets close to 7%

Asia markets soared on Thursday with the Nikkei jumping close to 7 percent, as traders reassessed the economic impact of Donald Trump’s victory in the U.S. presidential election.

The Nikkei 225 jumped 6.95 percent as the yen weakened against the dollar, trading at 105.62 as of 1:30 pm HK/SIN. The dollar/yen had plunged to 101 levels on Wednesday.

“U.S. yields surged higher on the back of expected increased fiscal spending by Trump. This has helped the dollar rally sharply against other currencies but especially the low yielding yen and the euro,” Anthony Darvall, chief market strategist at easyMarkets, said in a note on Thursday.

“A weaker yen has helped propel Japanese stocks up…completely erasing yesterday’s losses.”

The Australian benchmark index closed up 3.34 percent, or 172.24 points, at 5,328.8. The ASX’s strength was underpinned by its energy subindex, up 3.29 percent, and the materials subindex, up 5.75 percent. The gold subindex shed 4.82 percent.

New Zealand’s NZX 50 ended up 1.04 percent, or 69.51 points, at 6,733.72. Before markets opened, the Reserve Bank of New Zealand cut rates by 25 basis points to a record low of 1.75 percent. The RBNZ statement warned that “numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.”

In South Korea, the Kospi was up 2.07 percent, while Hong Kong’s Hang Seng surged 2.15 percent higher.

The Shanghai composite gained 1.23 percent, while the Shenzhen composite climbed up 1.351 percent.

The Chinese yuan plunged to a fresh six-year low against the dollar on Thursday, tracking a broad rally in the greenback after Trump’s surprise win.

The yuan fell to 6.7915 against the dollar as of 1:31 pm HK/SIN, down from its close at 6.7769 on Wednesday.

Chinese companies involved in One Belt, One Road (OBOR) a China-led initiative for a major infrastructure and trade framework, received a boost from a weaker yuan and Trump’s win, Reuters reported.

China Communications Construction was up 7.14 percent, while Zoomlion Heavy industries shot up 3.96 percent and Sany Heavy added 3.61 percent.

Spot gold, one of the initial winners of the U.S. election uncertainty, traded up 0.53 percent at $1,284.60 an ounce. On Wednesday, gold prices had surged nearly 5 percent to $1,337.40.

During Asian trade, U.S. crude futures slipped 0.07 percent to $45.24 a barrel, after settling at $45.27 in the U.S. Wednesday session, as Brent futures added 0.22 percent to $46.46.

“How long the Trump afterglow will last is a matter of conjecture. Less red tape and taxes should theoretically lead to higher oil production in the United States,” said Jeffrey Halley, senior market analyst at Oanda, in a note on Thursday. “Not good news for OPEC and non-OPEC members trying to thrash out a production cut. Oil’s post election afterglow may turn black gold to fool’s gold as the street gets back to reality.”

Crude oil futures recouped earlier losses of nearly 4 percent on Wednesday, as markets recovered from an initial shock of Trump’s victory.

On the economic data front, Australia reported a 1.6 percent rise in home loans in September on-month, compared to a Reuters poll which had forecast a 2 percent decline.

Meanwhile, in Japan, core machinery orders fell 3.3 percent month-on-month in September, suggesting a lack of pick-up in capital expenditure.

Later on Thursday, the Philippine central bank will announce its monetary policy decision.

On Wednesday, Asian shares, which traded as U.S. election poll results trickled in, tumbled as it became increasing apparent that Republican candidate was leading the race for the White House.

European stocks closed sharply higher, after opening with significant losses, while on Wall Street, U.S. stocks rose more than 1 percent, even though futures had plunged as the polls came in during the night in the U.S.

The Dow Jones industrial average ended up 1.4 percent at 18,589.69, while the S&P 500 closed up 1.11 percent at 2,136.26. The Nasdaq composite finished up 1.11 percent at 5,251.07.

“The rancor of the U.S. election campaign appeared to evaporate after conciliatory concession and acceptance speeches from the candidates,” Michael McCarthy, chief market strategist at CMC Markets, said in a note on Thursday. “In one of the most extraordinary trading sessions ever, Dow futures went from more than 800 points deficit to close 247 points higher.”

Source: CNBC