Asian shares scale 1-1/2-year peak on China trade, Trump's tax cut talk

Japan's Nikkei stock index surged 2.3 per cent thanks to the tailwind from a weaker currency and was poised to added 2.2 per cent for the week. Photograph:( AFP )

Reuters Tokyo, Japan Feb 10, 2017, 04.35 AM (IST)

Asian shares rallied to an 18-month peak on Friday, as investors cheered upbeat Chinese trade data and strong gains on Wall Street after US President Donald Trump promised to unveil a major tax announcement to lower the burden on businesses.

China's January exports rose 7.9 per cent from a year earlier, while imports jumped 16.7 per cent, beating expectations, preliminary data showed, getting the economy off to a strong start in 2017.

The increase "is related to the global pick-up in growth in the US, Europe and also emerging economies," said Jianguang Shen, chief economist at Mizuho Securities in Hong Kong.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.5 per cent to the highest level since July 2015 and was on track to gain 1.5 for the week. The Shanghai Composite Index was up 0.4 per cent.

Japan's Nikkei stock index surged 2.3 per cent thanks to the tailwind from a weaker currency and was poised to added 2.2 per cent for the week.

"Weaker yen combined with US stock price gains are fuelling an upward trend in the Tokyo market," said Hiroki Allen, chief representative of Superfund Japan.

Wall Street's three main indexes notched record highs on Thursday after President Donald Trump said he would make a major tax announcement in a few weeks, though he offered no details.

"The market loves the idea of tax reform," Chris Weston, chief market strategist at IG in Melbourne, said in a note. "It has corporate tax cuts in its sights and if Trump can push that along, with a more simplified personal tax regime the US and global equities will find buyers."

US economic data also underpinned the dollar. Initial jobless claims unexpectedly dropped last week to a nearly 43-year low, while inventories at wholesalers surged in December for a second straight month.

The dollar index, which tracks the greenback against a basket of six major currencies, was steady on the day at 100.64, on track to gain 0.8 per cent for the week.

The Australian dollar rode the trade data from the China, Australia's major export market. The Aussie rose 0.3 per cent to $0.7646, also supported by an optimistic view from the country's central bank, which suggested that further interest rate cuts were off the table.

The euro, under pressure from political concerns as the campaign for France's presidential election heated up, was 0.1 per cent higher at $1.0663. It was still down 1.1 per cent for the week.

Against its Japanese counterpart, the dollar gained 0.4 per cent to 113.66 yen, up 1 per cent for the week ahead of a meeting later on Friday between Trump and Japan's Prime Minister Shinzo Abe.

Abe will propose a new cabinet level framework for US-Japan talks on trade, security and macroeconomic issues, including currencies, a Japanese government official involved in planning the summit said.

Crude oil prices extended gains, with US prices bolstered by evidence that gasoline demand could strengthen in the world's biggest oil market.

US crude added 0.2 per cent to $53.09 a barrel. Brent crude rose 0.1 per cent to at $55.70.

(Reuters)