Tokyo — The dollar slipped broadly on Monday after US
President Donald Trump struck a protectionist tone in his inauguration
speech, offsetting optimism that he will follow through on promises of
tax cuts and other stimulus.
Japan’s Nikkei dropped 1.1% while shares in Australia dropped 0.7% after the Trump administration, on its first day in office, declared its intention to withdraw from the Trans-Pacific Partnership (TPP), a 12-nation trade pact that Japan and Australia also have signed up for.
Other Asian shares were resilient, however, in part due to a relief that there was no negative surprises, with Trump refraining from labelling China as a currency manipulator for now, an accusation he made while campaigning.
Hong Kong shares rose 0.6% and Taiwan shares rose 0.8%, helping to boost MSCI’s broadest index of Asia-Pacific shares outside Japan 0.4%.
US stock futures dipped 0.2%, erasing gains made on Friday.
In his inaugural address, Trump pledged to end what he called an "American carnage" of rusted factories and vowed to put "America first", laying out two simple rules — buy American and hire American.
Trump also said on Sunday he planned talks soon with the leaders of Canada and Mexico to begin renegotiating the North American Free Trade Agreement (Nafta).
"The market is getting nervous about the possibility that the world’s trade might shrink," said Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank in Tokyo.
"Many of his policies, including tax cuts and infrastructure spending, need approval from the Senate and that [may not be] easy," he said. "The markets that had been led by expectations on his policy since the election are now the dragged down by the reality."
The dollar had soared late last year on the expectation that Trump’s pledges to cut taxes and hike infrastructure spending would boost the US economy, but it has since lost steam.
The dollar fell as much as 1.1% against the yen to ¥113.435, edging towards its seven-week low of ¥112.57 touched on Wednesday.
The euro gained 0.4% to $1.0746, its highest level since December 8.
Most emerging market currencies gained.
The Mexican peso, which has weakened the most on Trump’s protectionist and anti-immigration stance, rose 0.6% to a two-week high of 21.44 per dollar. The rise came after its 1.7% gains on Friday, its biggest in two months.
The 10-year US treasuries yield fell to 2.432%, after having risen briefly on Friday to 2.513%, its highest since January 3.
The two-year yield, which is more sensitive to the Fed’s policy outlook, dropped sharply to 1.180% from Thursday’s three-week high of 1.250%, giving back much of gains made after Wednesday’s upbeat comments from Federal Reserve chair Janet Yellen.
Oil edged up after statements over the weekend from oil cartel Opec and other producers that they have been successfully implementing output cuts, but gains were limited by a surge in US drilling.
International benchmark Brent crude futures rose 0.2% to $55.58 a barrel, building on Friday’s 2.5% gains.
Reuters/BDlives
Japan’s Nikkei dropped 1.1% while shares in Australia dropped 0.7% after the Trump administration, on its first day in office, declared its intention to withdraw from the Trans-Pacific Partnership (TPP), a 12-nation trade pact that Japan and Australia also have signed up for.
Other Asian shares were resilient, however, in part due to a relief that there was no negative surprises, with Trump refraining from labelling China as a currency manipulator for now, an accusation he made while campaigning.
Hong Kong shares rose 0.6% and Taiwan shares rose 0.8%, helping to boost MSCI’s broadest index of Asia-Pacific shares outside Japan 0.4%.
US stock futures dipped 0.2%, erasing gains made on Friday.
In his inaugural address, Trump pledged to end what he called an "American carnage" of rusted factories and vowed to put "America first", laying out two simple rules — buy American and hire American.
Trump also said on Sunday he planned talks soon with the leaders of Canada and Mexico to begin renegotiating the North American Free Trade Agreement (Nafta).
"The market is getting nervous about the possibility that the world’s trade might shrink," said Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank in Tokyo.
"Many of his policies, including tax cuts and infrastructure spending, need approval from the Senate and that [may not be] easy," he said. "The markets that had been led by expectations on his policy since the election are now the dragged down by the reality."
The dollar had soared late last year on the expectation that Trump’s pledges to cut taxes and hike infrastructure spending would boost the US economy, but it has since lost steam.
The dollar fell as much as 1.1% against the yen to ¥113.435, edging towards its seven-week low of ¥112.57 touched on Wednesday.
The euro gained 0.4% to $1.0746, its highest level since December 8.
Most emerging market currencies gained.
The Mexican peso, which has weakened the most on Trump’s protectionist and anti-immigration stance, rose 0.6% to a two-week high of 21.44 per dollar. The rise came after its 1.7% gains on Friday, its biggest in two months.
The 10-year US treasuries yield fell to 2.432%, after having risen briefly on Friday to 2.513%, its highest since January 3.
The two-year yield, which is more sensitive to the Fed’s policy outlook, dropped sharply to 1.180% from Thursday’s three-week high of 1.250%, giving back much of gains made after Wednesday’s upbeat comments from Federal Reserve chair Janet Yellen.
Oil edged up after statements over the weekend from oil cartel Opec and other producers that they have been successfully implementing output cuts, but gains were limited by a surge in US drilling.
International benchmark Brent crude futures rose 0.2% to $55.58 a barrel, building on Friday’s 2.5% gains.
Reuters/BDlives
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