Asian shares close in on 18-month highs after Trump promises 'phenomenal' tax plan

An electric quotation board flashing share prices on the Nikkei key index of the Tokyo Stock Exchange is displayed in Tokyo on Feb 8, 2017.
An electric quotation board flashing share prices on the Nikkei key index of the Tokyo Stock Exchange is displayed in Tokyo on Feb 8, 2017.PHOTO: AFP

TOKYO (REUTERS) - Asian shares were close to 18-month highs on Friday (Feb 10), tracking a rally on Wall Street after US President Donald Trump promised to unveil a major tax announcement to lower the burden on businesses.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 per cent, testing its loftiest level since July 2015 touched a day earlier, and was on track to gain 1.1 per cent for the week.

Japan's Nikkei stock index surged 1.8 per cent as it got a tailwind from a weaker yen, poised to added 1.8 per cent for the week.

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 US 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.

St Louis Federal Reserve Bank President James Bullard also gave markets something to cheer about, saying US interest rates can likely remain low through at least 2017, with no clear sense yet of whether the Trump administration's policies will spark higher inflation or growth.

Bullard said he feels that the Fed will only need to raise interest rates once this year, and indicated a move probably will not happen when the central banks meets in March.

The dollar index, which tracks the greenback against a basket of six major currencies, edged up to 100.67, on track to gain 0.8 percent for the week.

The euro, recently pressured by political concerns ahead of the France's presidential election, was steady on the day at US$1.0656 but down 1.2 per cent for the week.

Against its Japanese counterpart, the dollar gained 0.3 per cent to 113.57 yen, up 0.9 per cent for the week ahead of a meeting later on Friday between US President Donald 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 0.1 per cent to US$53.06 a barrel.