Dollar, Asia markets boosted as Trump pledges tax move

Japan's Nikkei index led the regional advance, piling on more than two per cent, as the yen sank. AFP/Wang Zhao

Japan's Nikkei index led the regional advance, piling on more than two per cent, as the yen sank, while a forecast-busting trade report from China also lifted spirits in Hong Kong and Shanghai.

World markets surged in the two months after Trump's November election, buoyed by his promises to slash taxes, hike infrastructure spending and cut red tape to fan economic growth.

But the three weeks since he took office have been consumed with a series of controversial measures and outbursts on trade that had left dealers worried his domestic agenda had been put on the backburner.

The news sent a rocket through Wall Street, where all three main indexes ended at record levels, and the dollar powered higher.

On Friday, those gains continued with the greenback buying 113.75 yen, compared with 112.67 yen in New York and 112.00 yen in Asia earlier Thursday.

It also rose against higher-yielding Asia-Pacific currencies, with South Korea's won losing 0.4 per cent, Australia's dollar down 0.1 per cent and the Indonesian rupiah also losing 0.1 per cent. Malaysia's ringgit, the Singapore dollar and the New Zealand dollar were also well down.

WARY EYE ON EUROPE

On equity markets the Nikkei ended up 2.5 per cent. "In the end, policies pushed forward by Trump, including tax cuts and infrastructure investment, should be positive for Japanese companies," said Nobuyuki Fujimoto, a senior market analyst at SBI Securities.

Hong Kong added 0.2 per cent and Shanghai closed up 0.4 per cent after news China's exports and imports surged more than expected in January thanks to a pick-up in the world's number two economy, improving global manufacturing and stronger commodity prices.

Sydney rallied 1 per cent, Seoul 0.5 per cent and Singapore put on 0.7 per cent.

Taipei, Bangkok and Jakarta were also higher. However, while the mood is upbeat, investors are keeping a wary eye on events in Europe, where a fresh debt crisis is brewing in Greece after the International Monetary Fund warned the targets prescribed for it to qualify for European bailout cash are unrealistic.

Germany reaffirmed its opposition to cutting Athens' debt despite the IMF asking its creditors for some kind of relief. Worries over the issue have sent Greek 10-year bond yields towards 8 per cent, having sat below 6.5 per cent in November.

There is also trepidation surrounding French elections later in the year with concern that a populist wave that has swept Britain and the United States could see the ultra right-wing National Front win, and put the future of the EU in jeopardy.

Still, in early European trade London and Frankfurt added 0.5 per cent and Paris gained 0.3 per cent.

KEY FIGURES AROUND 0800GMT

Tokyo - Nikkei 225: UP 2.5 per cent at 19,378.93 (close)

Hong Kong - Hang Seng: UP 0.2 per cent at 23,574.98 (close)

Shanghai - Composite: UP 0.4 per cent at 3196.70 (close)

London - FTSE 100: UP 0.5 per cent at 7,262.54

Euro/dollar: DOWN at US$1.0644 from US$1.0658

Pound/dollar: DOWN at US$1.2485 from US$1.2496

Dollar/yen: UP at 113.75 yen from 112.67 yen

Oil - West Texas Intermediate: UP 12 cents at $53.12 per barrel

Oil - Brent North Sea: UP 13 cents at US$55.76

New York - Dow: UP 0.6 per cent at 20,172.40 (close)