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Asia stocks retreat after week-long Trump rally

Asia stocks retreat after week-long Trump rally

HONG KONG, Feb 17: Most Asian markets eased further Friday as investors cashed out following a healthy run-up since last week, and after Wall Street's Trump-fuelled surge finally came to an end, reports AFP. Equity markets around the world are sharply higher since the US president last Thursday pledged a "phenomenal" tax reform package soon, raising hopes he would press on with plans to fire up the US economy. The remarks were the spark for all three main Wall Street indices to hit record highs for five successive days, with help also coming from Federal Reserve boss Janet Yellen's upbeat assessment of the outlook for the US and hints at a March interest rate hike. However, analysts said despite the bright week for markets there remained a lot of uncertainty, particularly with Trump's first weeks in office engulfed in controversies, most recently over his relationship with Russia. "The current political landscape is unlikely to change soon, nor will the debates surrounding tax, fiscal and Fed policies," said Stephen Innes, senior trader at forex firm OANDA. Tokyo stocks fell Friday, led by major banks and automakers, while Toshiba posted its fourth day of losses as worries mount over its deteriorating finances. Equities started in the red, taking a lead from Wall Street where two of the three main indexes closed lower after five-straight days of record closes. The benchmark Nikkei 225 index lost 0.58 percent, or 112.91 points, to end the day at 19,234.62. It was down 0.74 percent over the week. The broader Topix index of all first-section issues slipped 0.42 percent, or 6.53 points, to 1,544.54, falling 0.13 percent this week. Investors appeared to be losing enthusiasm as the White House has yet to explain how tax cuts flagged by President Donald Trump last week will be financed, while other details of his economic growth plans remain elusive. "With the Trump administration still in a phase where they need to fill key positions, it's dampening the market's view and triggering dollar selling," said Juichi Wako, a senior strategist at Nomura Holdings. "It'll be hard for the yen to head lower until we have a clearer idea of when the US will hike rates, capping Japanese equities amid a lack of drivers," he told Bloomberg News. A strong yen generally darkens the outlook for Japanese exporters as it reduces the value of repatriated profits and can make their products more expensive abroad. The dollar was trading at 113.42 yen Friday, up from 113.23 yen in New York but still down from 113.85 yen in Asia earlier Thursday. Major automakers fell, with Toyota drooping 0.88 percent to 6,400 yen, while Nissan fell 0.62 percent to 1,116.5 yen and Honda lost 0.63 percent to 3,586 yen. Toshiba dived 9.22 percent to 184 yen on fears it could be demoted from the Tokyo Stock Exchange's first section. Its shares have lost more than 20 percent this week after the firm revealed huge losses in its US nuclear unit and said it was probing possible accounting fraud at the division. On Friday, Standard & Poor's warned it may cut Toshiba's credit rating again while the head of Mitsubishi Heavy Industries (MHI) told the Financial Times in an interview that he had ruled out a rescue of the firm's ailing nuclear unit. There has been speculation Toshiba may need to join forces with another major Japanese firm involved in atomic power to keep the business from crashing. Mobile carrier SoftBank fell 1.60 percent to 8,518 yen while banking giant Mitsubishi UFJ dropped 0.89 percent to 763.8 yen. "As such we should expect the markets to come under renewed pressure and to be severely tested in the weeks to come," he said in a commentary. Hong Kong stocks fell 0.3 percent in the afternoon while Shanghai shed 0.9 percent by the close. Sydney eased 0.2 percent and Seoul dropped 0.1 percent, while Tokyo lost 0.6 percent. But Singapore rallied 0.4 percent following data that showed the city-state's economy grew at its fastest pace in five years during October-December. The dollar was also struggling to break out against its major peers despite Yellen's comments this week to Congress that the economy continued to improve and left open the chance of a March rate hike. The greenback climbed around three percent from its levels just before Trump's tax comments-to flirt with the 115 yen mark Thursday. But it retreated in New York and was sitting at 113.34 yen in early Asia trade. In company news, Seoul-listed Samsung Electronics sank 0.6 percent following news that the heir to the tech giant had been arrested as part of a probe into corruption and influence-peddling that caused South Korea President Park Geun-Hye to be impeached.

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