Asian Stocks Rebound After Selloff as Markets Reassess Trump Win

  • Japan shares lead gains in Asian indexes after Tuesday’s rout
  • S&P 500 Index closes up 1.1% in New York following election

Is a U.S.-China Trade War on the Horizon?

Asian stocks jumped the most in almost nine months to join a global rebound on speculation Donald Trump will pursue business-friendly policies. Japanese shares surged as the yen slumped.

The MSCI Asia Pacific Index climbed 3.1 percent to 137.63 as of 4:01 p.m. in Hong Kong, heading for the biggest increase since Feb. 15. The measure tumbled 3.2 percent on Wednesday, the most since Brexit roiled global markets, after Trump shocked investors by winning the U.S. presidential race against opponent Hillary Clinton. Still, the steep selloff that hit Asian markets didn’t last through European and American trading hours, with the S&P 500 Index closing up 1.1 percent as investors digested the news.

“There will be short-term volatility following the Trump victory but this is going to be short-lived, much like Brexit,” said Joshua Crabb, Hong Kong-based head of Asian equities at a unit of Old Mutual Plc. “This outcome isn’t as bad as people think. There’s going to be some tax cuts and fiscal stimulus. That would be good for corporate earnings and will be positive for equities.”

Wednesday’s early knee-jerk selloff in global stocks and a rally in haven assets reversed on wagers that Trump would increase fiscal spending to spur economic growth, and as he struck a more conciliatory tone in his first speech as president-elect. Trump’s victory has also clouded the outlook for American monetary policy, amid speculation he could ramp up fiscal stimulus, while also potentially pursuing a more pro-business agenda.

Futures on the S&P 500 Index added 0.5 percent. The U.S. equity benchmark index gained on Wednesday, while the Dow Jones Industrial Average briefly eclipsed its all-time closing high, as shares of banks to heavy equipment manufacturers rallied. The CBOE Volatility Index, a measure of market turbulence, tumbled 23 percent Wednesday, the most in five years.

World Growth

Donald Trump

President-elect Donald Trump on Nov. 9.

Photographer: Spencer Platt/Getty Images

“Donald Trump as the next U.S. president is unlikely to derail world growth or to impair the current reflation at work across developed economies,” Geneva-based Florian Ielpo, head of macroeconomic research at Unigestion SA, which manages $20 billion globally, said by e-mail. Trump’s economic policies may prove unfriendly to emerging markets in Asia, but not developed economies like Japan, Ielpo said.

Japan’s Topix index advanced 5.8 percent, erasing the measure’s 4.6 percent slump on Wednesday, as the yen traded traded near a three-month low.

Financial shares posted the biggest increases on the Topix on speculation their businesses will improve under a Trump presidency. Mitsubishi UFJ Financial Group Inc. soared 11 percent, posting its biggest gain since May 2009, while Sumitomo Mitsui Financial Group Inc. rallied 8.6 percent. Nomura Holdings Inc. surged 11 percent as analysts expect brokerages are likely to benefit from increased market volatility.

Oil Rally

Hong Kong’s Hang Seng Index advanced 2 percent, after slumping 2.1 percent in the previous session as energy producers including China Shenhua Energy Co. and Cnooc Ltd. rallied after crude oil futures climbed back above $45 a barrel. The Shanghai Composite Index gained 1.4 percent to the highest close since January.

New Zealand’s S&P/NZX 50 Index jumped 1 percent as the nation’s central bank cut interest rates to a record low and said it has probably done enough to return inflation to target as the economy booms.

South Korea’s Kospi index rose 2.3 percent. Australia’s S&P/ASX 200 Index increased 3.3 percent and Taiwan’s Taiex index climbed 2.3 percent. Equity benchmark indexes in Indonesia, Singapore and the Philippines advanced at least 0.9 percent. India’s S&P BSE Sensex Index was up 1.6 percent.

— With assistance by En Han Choong

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