US tax plan hopes a mixed bag for Asian markets

SINGAPORE — Asian markets closed mixed yesterday after a global equities rally driven by optimism over a United States tax-reform plan, but President Donald Trump’s comments about ending the North American Free Trade Agreement (Nafta) capped gains.

The stronger yen pared some gains in Tokyo, where the benchmark Nikkei 225 index ended 0.3 per cent higher, while Seoul and Taipei edged up 0.1 per cent and Singapore fell 0.1 per cent.

But Shanghai ended 0.1 per cent lower and Sydney slipped 0.2 per cent. Hong Kong’s stock market was closed as powerful Typhoon Hato brought the southern Chinese city to a standstill.

Markets have chalked up a comeback after struggling in recent weeks due to the continuing standoff between the US and North Korea, which has been compounded by last Thursday’s terror attack in Barcelona.

The US president’s woes have fuelled speculation he will struggle to push through his market-friendly economy-boosting policies that fanned a global market rally in the months after his November election.

Despite ongoing chaos at the White House, markets have been heartened by reports suggesting that the Trump administration was making headway on a tax-reform plan.

“Some of the US political uncertainty may have been removed by a report on the Trump administration making progress on tax reform, but a wait-and-see mood is strong ahead of Jackson Hole and tensions in North Korea still in place,” said Mr Tsutomu Nakamura, strategist at Ueda Harlow Corp in Tokyo, in a commentary, referring to a central bankers meeting tomorrow.

The Japanese yen rose as investors pushed into safer investments after Mr Trump said in a US speech that he may end Nafta, and vowed to pressure Congress to fund a border wall with Mexico that was at the centre of his election campaign.

“The Nafta hot air may be as much an excuse to take a step back after Wall Street’s surge yesterday, as it is a legitimate concern about the president not appreciating the nuances of interdependence embedded in trade deals,” Mr Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore, told Bloomberg News.

Europe’s main stock markets eased at the start of trading yesterday, with London’s benchmark FTSE 100 index down 0.2 per cent, while the Paris CAC 40 index dipped 0.1 per cent and Frankfurt’s DAX 30 was flat.

All eyes are on the Jackson Hole symposium in Wyoming at the end of the week, which brings together the world’s top central bank chiefs.

Much of the attention will be on Federal Reserve boss Janet Yellen, with hopes for some clues about the bank’s plans to wind in its huge bond holdings.

European Central Bank chief Mario Draghi’s speech will also be closely watched as Frankfurt-based policymakers consider cutting back their own balance sheet. AGENCIES