Asian markets rally after Dow crosses 20,000 for first time

Traders work on the floor of the New York Stock Exchange (NYSE) as the Dow Jones industrial average closed above the 20,000 mark for the first time on Jan 25, 2017, in New York City.
Traders work on the floor of the New York Stock Exchange (NYSE) as the Dow Jones industrial average closed above the 20,000 mark for the first time on Jan 25, 2017, in New York City.PHOTO: AFP

Markets rallied across the region yesterday after Wall Street closed above 20,000 points for the first time ever.

The surge in New York on Wednesday was sparked by President Donald Trump's announcement of infrastructure projects that fuelled hopes of faster growth in the United States.

Asian markets took the hint with investors betting on more pro- growth policies, tax cuts and deregulation from the new administration. Singapore was the best performer in South-east Asia, up 0.39 per cent, putting it ahead 5.94 per cent since the start of the year.

Malaysia added 0.49 per cent and Thailand gained 0.42 per cent, while Hong Kong rallied 1.41 per cent, Japan advanced 1.81 per cent and Shanghai rose 0.31 per cent.

The market rises were underpinned by hopes that US growth would filter through to the global economy, creating demand for commodities and driving investors out of safe haven investments such as gold, which fell 0.9 per cent to US$1,192.91 yesterday. The Dow continued its strong run, opening up 0.04 per cent, at 20,076.25 points. The S&P Index hit a new record, crossing 2,300 points soon after the opening bell yesterday.

While the market is still upbeat, Bank of Singapore highlighted the risk of policy uncertainty. "A better economic growth outlook for most of Asia in 2017 is expected, although Mr Trump's protectionist rhetoric underscores increased risks of trade conflicts, which could put pressure on growth and corporate earnings forecasts," it said.

It was a different story for the greenback, which continued to weaken against Asian currencies and even the Mexican peso, which hit a three-week high on Thursday despite Mr Trump having ordered the building of a border wall.

The Singdollar dipped 0.1 per cent against the greenback yesterday but was still near its highest since mid-November despite fears over Mr Trump's protectionist stance.

Protectionism could hurt Singa- pore's manufacturing in the long term, but its near-term prospects are heading up rather than down. Output surged 21.3 per cent last month from a year earlier, the best monthly performance since December 2011.

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A version of this article appeared in the print edition of The Straits Times on January 27, 2017, with the headline 'Asian markets rally after Dow crosses 20,000 for first time'. Print Edition | Subscribe