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Asia markets mixed after US records

Asia markets mixed after US records

HONG KONG, Nov 29: Asian traders stayed cautious Wednesday despite fresh records on Wall Street as Donald Trump's tax-cut plans moved a step closer, while the pound extended gains on reports of a breakthrough in Brexit talks, reports AFP. While markets were mixed, investors brushed off early worries about North Korea's latest missile test. Bitcoin continued its surge to break the $10,000 mark for the first time. New York traders cheered a forecast-beating US consumer confidence survey and news that a key senate committee agreed to a fiscal overhaul plan late Tuesday, fuelling a rally to new records on the city's three main indexes. The move allows Trump's much-vaunted proposals to be debated on the floor of the upper chamber, a relief to many who had feared opposition from some Republicans would kill it. Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, said the agreement "is a significant milestone and the chances of a negotiated version being implemented this year is likely". "There is a lot of optimism being priced in currently," he said, but warned that "delays or a rejection of the bill will result in a sharp correction in December". The dollar rallied in US trade on the news and managed to hold its gains in Asia, buying 111.48 yen after having dipped below 111 yen at one point Tuesday. But seemingly dovish comments from Trump's choice to head the Federal Reserve kept it from surging. Tokyo stocks closed higher on Wednesday, shrugging off North Korea's latest launch of an intercontinental ballistic missile that splashed down in Japan's exclusive economic zone. The benchmark Nikkei 225 index gained 0.49 percent, or 110.96 points, to close at 22,597.20. The broader Topix index ended up 0.79 percent, or 14.08 points, at 1,786.15. "The market is reacting in a cool-headed manner to the latest missile launch by North Korea," said Yoshihiro Ito, chief strategist at Okasan Online Securities. "The limited impact of North Korea's missile launch on the yen's exchange rate" also supported the market, said SBI Securities in a commentary. The dollar fetched 111.54 yen in Asian trade, up slightly from 111.40 in New York late Tuesday. Leading musical instruments maker Yamaha jumped 5.16 percent to 4,075 yen after it revised up its annual profit forecast. Financials were also among gainers, reflecting rallies among US rivals on Wall Street, with mega bank Mitsubishi UFJ closing 2.76 percent higher at 784.5 yen. Electronics giant Panasonic ended up 1.19 percent at 1,690 yen. Europe's stock markets took to higher ground Tuesday, with London fuelled by the energy sector, as US markets rose to new highs. Ongoing worries about China's crackdown on risky and speculative trading dragged Hong Kong 0.1 percent down in the afternoon but Shanghai recovered from early losses to end 0.1 percent higher. Seoul and Singapore each dropped 0.1 percent. Analysts said there was some concern that in trying to calm surging mainland markets and stop cash leaving the country, China would try to stem the amount dealers can invest in Hong Kong. "If money keeps going south to Hong Kong, then for a closed-end system such as (China's) market, it will present a liquidity drainage," Hao Hong, chief strategist at Bocom International Holdings in Hong Kong, told Bloomberg News. "Now that they have a policy stance to slow down the flows, and Hong Kong is coming near the 30,000 resistance, you may see money slowing down." The pound edged up after Tuesday's rally following reports of a British-EU deal on a Brexit bill, meaning they can now move to talks on a future trade deal. "This headline is fantastically positive news for the beleaguered pound," said Stephen Innes, head of Asia-Pacific trading at OANDA. "The financial settlement should pave the way to possible breakthrough in negotiations in December, overcoming investors' biggest fears: a hard Brexit." Bitcoin, which has ploughed to continuous records in recent weeks, finally broke $10,000 Wednesday and pushed towards $11,000. The virtual currency hit a high of $10,903 in Asia with some commentators suggesting it is being bought as an alternative, with mainstream global markets valued too high. But there is a worry that the rise-it has surged more than tenfold since its 2017 low in mid-January-will result in a massive correction. "This is a bubble and there is a lot of froth. This is going to be the biggest bubble of our lifetimes," warned hedge fund manager Mike Novogratz at a cryptocurrency conference earlier this week. Europe's stock markets took to higher ground Tuesday, with London fuelled by the energy sector, as US markets rose to new highs. " 'Turnaround Tuesday' has seen the FTSE 100 and European markets move higher once again, while in the US the big three have all scored new record highs," said Chris Beauchamp, chief market analyst at online trading firm IG. Royal Dutch Shell rallied after the energy giant pledged to resume all-cash dividends to shareholders as profitability improves thanks to higher oil prices and deep cost-cutting. "Traders are viewing the move as a sign the major oil company is returning to bullish days of before the downturn in the oil market," said David Madden, market analyst at CMC Markets UK. Shares in the Anglo-Dutch titan closed up nearly 4 percent as investors welcomed the news, which also brought along rival BP which finished 1.05 percent higher. London's financial sector was somewhat boosted after the Bank of England declared that Britain's seven largest banks had passed its latest stress tests. All seven-Barclays, HSBC, Royal Bank of Scotland, Lloyds, Nationwide, Santander and Standard Chartered-passed its assessments for the first time since the central band began testing in 2014, and are "resilient" to recession. Barclays and RBS "failed to pass the BoE's 'systemic' hurdle, but neither bank was required to raise additional capital," said Madden. RBS shares nevertheless gained 1.35 percent while Barclays was little changed. Elsewhere, Asian traders shifted cautiously on Tuesday with Chinese stocks swinging back and forth, while concerns grew about the future of the much-vaunted US tax reforms. After months of gains for equities worldwide, investors are taking a step back on unease that some valuations may be too high, though bitcoin continued its surge to new records and was on course to break the $10,000 mark. Shanghai ended a volatile day up 0.3 percent, having lost more than three percent since Wednesday, with mainland dealers spooked by Beijing's crackdown on risky dealing. A warning from Chinese authorities last week about the sharp rise in one of the country's best-performing stocks added to worries. Analysts have also noted a lack of intervention by state-backed firms to support key issues, indicating a willingness to see prices fall to cool the market. Greg McKenna, chief market strategist at AxiTrader, also pointed out that several data reports had undershot expectations recently, raising worries about the Chinese economy. "That means the first two weeks of December, when we get the next monthly update on the Chinese economy, are going to be very important," he said. Wall Street stocks climbed back into record territory as the US Senate held a confirmation hearing for Jerome Powell, nominated to succeed Janet Yellen as Federal Reserve chief. Beauchamp said investors had been concerned about a possible lack of continuity at the US central bank, "but today's testimony has put those fears to rest it seems, with 'steady as she goes' being the message to take away." And investors are closely eyeing senators who are expected to vote on Donald Trump's tax-cut plans, amid fears his Republican party might not be able to muster enough votes to push it through. While the passage of the bill would probably fire up global markets, analysts are concerned its failure could lead to a correction.

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