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Asian Markets at Close Report

European Markets at Close Report

Mar 27, 2017

Asian Markets at Close Report on March 27, 2017: Asian Markets Falls Sharply as Hopes Fade for Trump Policy Boost



Kenan Machado

Asian stock markets fell on Monday as investors continued to worry about the Trump’s administration’s inability to push through its policy initiatives.
The scrapping Friday of an already-delayed vote on a health-care plan — after Republicans in the House of Representatives couldn’t muster enough support — has investors now fretting about other efforts, including a tax overhaul and infrastructure spending.
“It’s time to take caution on the reflation trade,” said Hao Hong, head of research at Bocom International. “The [health-care] impasse puts Trump’s ability to execute his election promises in question, on which the markets globally have been running very hard.”
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Japan’s Nikkei Stock Average NIK, -1.44%   dropped 1.6% at one point, hitting its lowest levels since early February, but pared that slightly to close down 1.4%. The dollar USDJPY, -1.04%  fell nearly 1% against the yen, hitting fresh four-month lows. The dollar was recently trading at around ¥110.23.
Infrastructure stocks, which rose in anticipation of a Trump-driven increase in spending, were among Monday’s largest decliners. Steel producer JFE Holdings 5411, -2.17%   and construction-machinery makers Kubota 6326, -3.20%   fell about 3%.
Financial stocks suffered similar losses as bond yields fell. The yield on the benchmark U.S. 10-year Treasury note TMUBMUSD10Y, -2.04%   was at 2.36% in afternoon Asian action, down from 2.4% late Friday.
The WSJ Dollar Index BUXX, -0.67%  , which measures the dollar against a basket of 16 currencies, fell 0.5% to 89.63, within a whisker of its level on Nov. 9, the day after the U.S. election, when its dizzying rally began.
Oil CLK7, -0.65%  , which had started the day higher, turned lower later in the morning despite the dollar’s decline as investors shed a host of so-called risk assets.
Commodity weakness, especially among metals firms, helped push Australia’s S&P/ASX XJO, -0.12%  lower. Off as much as 1% earlier, it closed down 0.1%. Still, BHP Billiton BHP, -2.93%  and Fortescue Metals FMG, -3.04%  dropped nearly 3%.
Most other stock markets in Asia were also logging modest declines, with indexes in Hong Kong HSI, -0.68% , Shenzhen, Taiwan and India all down about 0.3%. Korea’s Kospi SEU, -0.61%  , which has been a regional star of late, was off 0.5%.
Some believe that if a wider stock selloff occurs in the U.S.-- major indexes there finished Friday about 2% below their recent record highs — a redistribution of capital could follow. That could benefit Asian equities, where earnings growth has been robust and on the upswing.
Read: Dow futures slide more than 150 points as doubts over Trump’s agenda build
Diversification would be “pretty good news for global markets because it has been such a one-way ride for the U.S.,” said Sean Darby, chief global equity strategist at Jefferies in Hong Kong. “I think the markets (in the region) will see through this.”
But there is also the risk that confidence will wane among investors and businesses alike. That would likely hurt Asia, where many economies depend on global growth’s gaining steam.
“With fiscal policy uncertainty rising again, the risk is that business and consumer sentiment reverse recent gains--which would have growth consequences,” said analysts at ANZ
— Kosaku Narioka contributed to this article