Asian emerging markets up but Trump fears remain

Hong Kong (AFP): Most Asian emerging markets rose on Tuesday (15 November) after the previous day’s heavy losses while the dollar dipped against most peers but traders remained on edge over Donald Trump’s plans for global trade agreements.

While shares in developed economies have rallied and safe-haven sovereign debt prices have fallen, many trading floors in Asia have taken a hit recently over worries Trump will throw up tariffs to the world’s biggest economy.

His plans for huge spending and tax cuts at home have also fanned expectations the Federal Reserve will hike interest rates more sharply than initially planned, sending the dollar soaring and fuelling an exodus from emerging markets.

However, after a two-day retreat on most regional bourses, there was a tentative recovery with Manila up 0.3%, Jakarta 0.5% higher and Bangkok added 0.2%.

There were also gains of 0.4% in Singapore and a 0.5% rise in Wellington while Hong Kong gained 0.5%.

However, Tokyo was marginally lower, having surged more than 8% to a nine-month high since Thursday on the back of a rally in the dollar against the yen.

Shanghai was off 0.1%, while Sydney and Seoul each shed 0.4%.

In early European trade London rose 0.5%, Paris put on 0.4% and Frankfurt added 0.3%.

“Risks are elevated, and we are expecting further increases in volatility as markets attempt to second-guess the policies that might eventually come out from the US,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told Bloomberg News.

The dollar dipped back from a five-month high of ¥ 108.54, but traders suggested it could test the ¥110 mark as soon as this week, with eyes on Fed chief Janet Yellen’s congressional testimony later this week.

The central bank is widely expected to hike borrowing costs next month but her remarks Thursday will be pored over for clues about its plans for next year.

After pausing around 107 to 108, the dollar will resume its uptrend toward ¥ 110 by year-end.”

The dollar sank against higher-yielding currencies, with the South Korean won, Australian dollar, Thai baht and New Zealand dollar all well up. The euro rose after hitting an 11-month low of $ 1.0709 on Monday.