Asia shares rebound as Trump turnaround 'astonishes'
Asian shares rebounded on Thursday and the dollar firmed after global markets made a remarkable comeback from the shock of Republican Donald Trump's presidential victory, dumping safe-havens for the tempting returns of risk assets, Reuters reported.
Analysts were more than a little puzzled by the sharp reversal after global markets plunged initially on Wednesday as Trump swept to power.
"An astonishing turnaround in risk appetite pushed equities and Treasury yields higher," said Imre Speizer, an economist at Westpac.
"Markets appeared to reassess the economic outlook under Trump, towards one of higher growth and higher inflation."
He noted that a key market barometer of 10-year inflation expectations had jumped to a 16-month peak of 1.87 percent.
Trump has also promised generous tax cuts, particularly for the higher paid, and more infrastructure and defence spending.
The U.S. dollar carved out a staggering range, rebounding from as low as 101.19 yen all the way to 105.83, a move that will come as a huge relief to Japanese exporters.
The Nikkei duly recouped all of Wednesday's 5 percent loss and more to trade up 6 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.7 percent, while Australian stocks soared 3 percent in the largest daily gain since late 2011.
Yields on U.S. Treasury 10-year notes reversed an initial plunge to 1.716 percent to reach 2.09 percent, the highest since January. The net rise of 21 basis points was also the largest daily increase since July 2013. [US/]
Investors again revised the outlook for U.S. interest rates, with the probability of a December rate hike by the Federal Reserve going from as low as 30 percent to as high as 80 percent.
The dollar responded by rising across the board.
Against a basket of currencies, the dollar recovered from its Wednesday trough of 95.885 to reach 98.602, a gain of 0.8 percent on the day.
Having stretched as high as $1.1299 in the initial panic over Trump's win, the euro then slumped all the way to $1.0923 - a move of almost four cents.
The action was no less noteworthy on Wall Street, where S&P 500 futures had shed 5 percent at one stage in Asian trade on Wednesday only to stand 1.1 percent higher late in the day.
The Dow jumped 1.4 percent, while the cash S&P 500 and the Nasdaq both added 1.11 percent. Trading volume was the highest since June, when Britain also shocked traders by voting to abandon the European Union.
The CBOE Volatility index, a gauge of investor anxiety, fell 23 percent and was on track for its biggest daily drop since late June. [.N]