Asian Shares Jump With Metals as Trump Reassessed; Kiwi Weakens 

• Stock gains led by raw-materials producers as copper jumps

• Australian 10-year debt yield surges more than 20 basis points

Stocks in Asia rebounded from their steepest slide since Brexit, industrial metals surged and regional bonds tumbled after Donald Trump’s election victory and spending pledges spurred gains in U.S. shares.

The MSCI Asia Pacific Index advanced by the most since February, led by gains in raw-materials producers. Futures on the S&P 500 Index climbed after swinging wildly in the last session, when they briefly sank by a 5 percent daily limit as the results of the U.S. presidential vote were announced. Australia’s 10-year bond yield jumped amid speculation Trump’s spending plans will fuel inflation, while New Zealand’s dollar fell after the central bank expressed concern about the currency’s strength. Copper, aluminum and nickel rose to their highest levels in a year.

There’s been a U-turn in investor sentiment since the largely unexpected win for Trump triggered a knee-jerk selloff in equities and rush into haven assets. While it’s common for stock-market volatility to surge after U.S. elections, initial moves don’t tend to prove long-lasting and that also proved the case in the wake of Britain’s June vote to leave the European Union. Trump has signaled spending of more than $500 billion to rebuild U.S. infrastructure and also pledged to lower taxes.

“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.”

Stocks

The MSCI Asia Pacific Index climbed 3.2 percent as of 2:30 p.m. Tokyo time, bouncing back from a 3.2 percent slide on Wednesday. Japan’s Topix index jumped more than 5 percent, after sinking 4.6 percent in the last session, and Australia’s benchmark rallied by the most in five years.

BHP Billiton Ltd., the top miner, and Rio Tinto Group had intraday gains of more than 9 percent in Sydney, their biggest increases since 2009. In Hong Kong, Jiangxi Copper Co., China’s second-largest producer by output, rose as much as 11 percent and Russian aluminum maker United Co. Rusal Plc jumped by the most on record. Trump’s spending plans will spur demand for copper and other commodities at a time of tightening global supply, according to Jefferies Group LLC.

“It’s hard to make a directional bet as no one knows for sure what Trump will do,” said Hao Hong, chief strategist at Bocom International Holdings Co. in Hong Kong. “Bets that are relatively certain include infrastructure projects, defense spending and unfriendly trade policy. Commodity stocks are jumping on such expectations.”

S&P 500 futures advanced 0.4 percent, after closing up 1.2 percent on Wednesday. Billionaire Carl Icahn, 80, said he left President-elect Trump’s victory party to bet about $1 billion on U.S. equities. The investor said that the U.S. economy still faces challenges but Trump will be “a positive, not a negative” for the country. Futures on the U.K.’s FTSE 100 Index added 1 percent.

Currencies

The Bloomberg Dollar Spot Index slipped 0.1 percent after rallying 1.4 percent on Wednesday. The implied probability of a December Fed hike, which had fallen to less than 50 percent as results pointed to a Trump triumph, has jumped back to around 82 percent since he announced his spending plans.

“A Trump presidency is dollar bullish because Trump’s economic policies are inflationary and will force the Fed to raise the Funds rate at a faster pace than otherwise,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia.

San Francisco Fed President John Williams said Wednesday that the argument for gradual interest-rate increases “still makes sense to me.” St. Louis Fed chief James Bullard may also comment on the policy outlook when he speaks on Thursday. Fed Vice Chairman Stanley Fischer will be attending an annual gathering of central bankers from the Americas in Santiago, Chile.

The yen advanced 0.1 percent versus the greenback, set for the first gain in a week. It jumped as much as 3.9 percent in the last session before closing lower. Mexico’s peso rose 0.3 percent, after plunging on Wednesday by the most in a decade amid concern exports will be hurt by protectionist trade policies advocated by Trump.

New Zealand’s dollar dropped versus all but one of its major peers after the central bank cut its benchmark interest rate to a record low and Assistant Governor John McDermott said the authority is concerned about the currency’s strength and borrowing costs may be reduced further.

The yuan slipped to a six-year low amid concern China’s exports will be hit as U.S. trade policy turns more protectionist under Trump. He has called China a “grand master” at currency manipulation and has threatened tariffs of up to 45 percent on imports from the Asian nation, a step that Commonwealth Bank of Australia estimated would cut Chinese shipments to the the U.S. by 25 percent in the first year.

Commodities

Iron ore jumped by the daily limit on the Dalian Commodity Exchange to the highest level since October 2014, before paring gains. Copper surged 2.7 percent in London and is up 18 percent for the year.

“Potential U.S. fiscal stimulus and positive Chinese economic data is working in favor to spur further copper rallies,” Xiao Fu, head of commodity markets strategy at Bank of China International in London, said in an e-mailed report. “Speculators are finally returning to the copper market.”

Crude oil slipped was little changed at $45.25 a barrel in New York after data showed U.S. stockpiles expanded for the second week in a row.

Gold was up 0.4 percent. It jumped as much as 4.8 percent on Wednesday as the U.S. election results spurred demand for the safest assets, before giving up almost of the advance as the conciliatory tone of Trump’s victory speech helped revive risk appetite.

Bonds

Ten-year U.S. Treasury yields declined by one basis point to 2.04 percent, after soaring 20 basis points in the last session as a bond market gauge of inflation expectations climbed to the highest point since July 2015. An auction of the tenor on Wednesday drew the weakest demand since 2009, ahead of an offering of 30-year securities on Thursday.

“An increase of 20 basis points over one day is a good level to re-enter,” said Kei Katayama, a bond manager in Tokyo at Daiwa SB Investments, which oversees $51.2 billion. “There’s still a lot of uncertainty from the new president.”

The yield on Australia’s 10-year government bonds surged 27 basis points to 2.50 percent, the biggest jump since 2013. The yield on similar-maturity notes in New Zealand climbed 22 basis points to 2.97 percent.

Source: Bloomberg – Asian Shares Jump With Metals as Trump Reassessed; Kiwi Weakens

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