Dollar, Asia markets boosted as Trump pledges tax move

The dollar extended a rally on Friday after Donald Trump said he would release details of a "phenomenal" tax-cut plan, sending Asian stock markets soaring on hopes it will ramp up the US economy.

Japan's Nikkei index led the regional advance, piling on more than two percent, as the yen sank, while a forecast-busting trade report from China also lifted spirits in Hong Kong and Shanghai.

World markets surged in the two months after Trump's November election, buoyed by his promises to slash taxes, hike infrastructure spending and cut red tape to fan economic growth.

But the three weeks since he took office have been consumed with a series of controversial measures and outbursts on trade that had left dealers worried his domestic agenda had been put on the backburner.

The news sent a rocket through Wall Street, where all three main indexes ended at record levels, and the dollar powered higher.

On Friday, those gains continued with the greenback buying 113.75 yen, compared with 112.67 yen in New York and 112.00 yen in Asia earlier Thursday.

It also rose against higher-yielding Asia-Pacific currencies, with South Korea's won losing 0.4 percent, Australia's dollar down 0.1 percent and the Indonesian rupiah also losing 0.1 percent. Malaysia's ringgit, the Singapore dollar and the New Zealand dollar were also well down.

- Wary eye on Europe -

On equity markets the Nikkei ended up 2.5 percent.

"In the end, policies pushed forward by Trump, including tax cuts and infrastructure investment, should be positive for Japanese companies," said Nobuyuki Fujimoto, a senior market analyst at SBI Securities.

Hong Kong added 0.2 percent and Shanghai closed up 0.4 percent after news China's exports and imports surged more than expected in January thanks to a pick-up in the world's number two economy, improving global manufacturing and stronger commodity prices.

Sydney rallied one percent, Seoul 0.5 percent and Singapore put on 0.7 percent.

Taipei, Bangkok and Jakarta were also higher.

However, while the mood is upbeat, investors are keeping a wary eye on events in Europe, where a fresh debt crisis is brewing in Greece after the International Monetary Fund warned the targets prescribed for it to qualify for European bailout cash are unrealistic.

Germany reaffirmed its opposition to cutting Athens' debt despite the IMF asking its creditors for some kind of relief. Worries over the issue have sent Greek 10-year bond yields towards eight percent, having sat below 6.5 percent in November.

There is also trepidation surrounding French elections later in the year with concern that a populist wave that has swept Britain and the United States could see the ultra right-wing National Front win, and put the future of the EU in jeopardy.

Still, in early European trade London and Frankfurt added 0.5 percent and Paris gained 0.3 percent.

- Key figures around 0800 GMT -

Tokyo - Nikkei 225: UP 2.5 percent at 19,378.93 (close)

Hong Kong - Hang Seng: UP 0.2 percent at 23,574.98 (close)

Shanghai - Composite: UP 0.4 percent at 3196.70 (close)

London - FTSE 100: UP 0.5 percent at 7,262.54

Euro/dollar: DOWN at $1.0644 from $1.0658

Pound/dollar: DOWN at $1.2485 from $1.2496

Dollar/yen: UP at 113.75 yen from 112.67 yen

Oil - West Texas Intermediate: UP 12 cents at $53.12 per barrel

Oil - Brent North Sea: UP 13 cents at $55.76

New York - Dow: UP 0.6 percent at 20,172.40 (close)

source: AFP