Asia shares rebound in sharp turnaround from Trump shock
Asian shares rebounded on Thursday and the dollar firmed in a remarkable snapback from the shock of Republican Donald Trump's presidential victory, though the speed of the reversal left some market watchers scratching their heads.
MSCI's broadest index of Asia-Pacific shares outside Japan bounced 1.8 percent after slumping 2.4 percent on Wednesday as global markets plunged on signs that Trump was sweeping to power.
The Nikkei duly recouped all of Wednesday's 5 percent loss and more to trade up roughly 6 percent as the yen weakened following the previous session's surge.
Despite the sharp election recoil in global markets initially, U.S. investors opted to focus instead on Trump's key policy priorities, which include generous tax cuts and higher infrastructure and defense spending, along with deregulation for banks.
"Investors are puzzled with their emotional investment decisions. They were risk averse yesterday, then after seeing that Americans were optimistic and chasing the market higher, they wasted no time reversing their positions," said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo.
"Some of the investors must be thinking that they shouldn't have sold after all."
Australian stocks soared 2.8 percent in the largest daily gain since late 2011 and Shanghai rose 1.1 percent.
"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, toward 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.
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