Asian stocks extend Wall Street rally, US dollar bounces

SINGAPORE (REUTERS, BLOOMBERG) - Stocks in Asia climbed on Wednesday following a rally on Wall Street as investors welcomed US President Donald Trump's eagerness to deliver on his campaign promises.

Trump's shift back to growth initiatives including promising corporate tax breaks to fuel investment at home after focusing on protectionism in the first few days snapped the US dollar's losing streak and pushed Treasury yields higher.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.16 per cent.

A weaker yen spurred gains in Japanese shares. The yen fell 0.1 per cent to 113.86 per dollar as of 9:19am in Tokyo, extending the previous session's slide of 1 per cent.

Japan's Topix index climbed 1.3 per cent. Data on Wednesday showed Japan snapped a 14-month run of falling exports in December, thanks to a global pickup in demand and a surge in shipments to China.

Australia's S&P/ASX 200 Index added 0.3 per cent. Futures on Hong Kong's Hang Seng gained 0.3 per cent.  The Kospi index advanced 0.3 per cent. South Korea's economy expanded at the slowest pace in more than a year in the fourth quarter.

"After a bumpy start in the first few days where Trump focused on protectionist measures, the markets reacted positively overnight with US equity benchmarks boosted to fresh all-time highs," said James Woods, global investment strategist at Rivkin Securities in Sydney.

The S&P 500 and Nasdaq set records on Tuesday in a broad rally led by financial and technology stocks.

Trump signed two executive orders on Tuesday to move forward with construction of the controversial Keystone XL and Dakota Access oil pipelines, rolling back key Obama administration environmental actions in favour of expanding energy infrastructure.

He also met chief executives of the Big Three US automakers and pressed them to build more cars in the United States.

Investors also refocused on a raft of corporate results, including the world's largest mining company and China's biggest e-commerce firm, turning the spotlight away from political developments that have driven many recent market moves.

Alibaba Group Holding lifted its sales forecast as Chinese spending held strong and BHP Billiton reported a gain in second-quarter iron ore production after prices soared on demand from China. Earnings at DR Horton, the largest US homebuilder, topped analysts' estimates as job growth fueled buyer demand.

The dollar halted a three-day losing streak against a basket of its trade-weighted rivals and pushed higher on Tuesday.

The pound added to overnight gains and was trading at 1.22 per dollar after Britain's Supreme Court ruled that the government would need approval from Britain's parliament before formally triggering the country's departure from the European Union. It has bounced 4 per cent over the last week.

In bond markets, US Treasury yields rose with two-year benchmark yields holding firm at 1.22 per cent compared to 1.15 per cent on Tuesday, reflecting strong economic conditions. Ten year yields were at 2.46 per cent.

Oil prices consolidated overnight gains with Brent futures flat after rising 0.4 per cent overnight.

Renewed optimism over Trump's growth policies took the wind out of a recent rally in safe-haven gold which stabilised around the US$1,210 per ounce level.