Asia markets slip as Trump woes raise safe haven bids, dollar weaken

Asian stocks came under pressure on Thursday as investors flooded into safe haven plays as the administration of President Donald Trump moves on fronts as diverse as Iran, global trade, immigration and the Supreme Court less than two weeks after taking office.

While markets initially responded positively to a Trump presidency in hopes of pro-growth policies like tax cuts, several of his executive orders, such as the indefinite travel ban on visitors from seven Muslim-majority countries, have raised concerns.

"The travel ban has seen uncertainty creep in around whether the new administration knows what it is doing and how isolationist Trump is prepared to the take the U.S.," said Shane Oliver, head of investment strategy and chief economist at AMP Capital, in a report.

Spot gold, usually a safe-haven play, gained 0.58 percent to $1,216.22 per ounce. Safe-haven currencies were also getting a leg up, with yen strengthening to 112.58 against the greenback, and the Kiwi rising to $0.7300, compared to levels around $0.72 seen earlier. The Australian dollar jumped 0.59 percent to trade at $0.7643 by 1:40 p.m. HK/SIN.

"These last few days have seen safe-haven buying. Investors have flipped out of equities and into currencies such as Yen and New Zealand dollar. Gold has been the obvious beneficiary as well rallying some $30 an ounce from its lows last week," said Jeffrey Halley, senior market analyst at OANDA, in a Thursday note.

Halley added that the market had turned into a "short-term headline driven beast."

Down Under, the ASX 200 closed down 0.14 percent or 7.8 points at 5,645.4. Losses were capped by a stronger performance in the gold sub-index, which was up 2.04 percent.

Australian data showed a record seasonally-adjusted trade surplus of A$3.5 billion ($2.67 billion) in December, versus analysts expectations of a A$2.2 billion surplus. Exports in December rose by 5 percent due to higher iron ore and coal prices, while imports rose by 1 percent from the previous month. The stronger-than-expected trade figures also gave the Australian dollar a boost above the $0.76 handle.

As well, reports surfaced of tension between the American president and Australian Prime Minister Malcolm Turnbull in a phone call at the weekend, where Trump criticized a Australian-U.S. refugee deal brokered by the Obama administration and told Turnbull that he had conversed with other political leaders earlier, but "this was the worst call by far."

Japan's benchmark index lost 1.22 percent or 233.5 points to close down 18,914.58 as the investors bought into the yen, in turn strengthening the currency against the dollar. A stronger yen is generally seen as a negative for Japanese stocks.

Japanese policymakers rejected Trump's charges of currency manipulation on Wednesday. Prime Minister Shinzo Abe defended the Bank of Japan's huge stimulus program and said it was to reflate the economy, and was not currency manipulation.

South Korea's Kospi which was wavering for most of the Asian session, closed down 0.46 percent or 9.47 points at 2,071 after data showed that consumer prices rose 2 percent in January on the back of higher oil prices, beating a Reuters forecast of 0.4 percent.

But the East Asian country's political uncertainty continues to weigh on the market, after former United Nations Secretary-General Ban Ki-moon dropped out of the running to become the South Korean president.

Hong Kong's Hang Seng was down 0.65 percent by afternoon trading. Markets in China are closed and will reopen on Friday after a week-long Lunar New Year break.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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The dollar index remained below the 100 handle to trade at 99.495 during Asian trade, weakened after President Trump and a senior trade adviser took aim at China, Germany and Japan, accusing the three countries of currency manipulation on Tuesday.

During the Asian session, Dow futures fell 0.33 percent or 66 points at 1:45 p.m. HK/SIN, S&P 500 futures were also in the red, down 0.41 percent or 9.3 points, while Nasdaq futures dipped 0.49 percent or 25.3 points.

The Dow Jones industrial average was up 0.14 percent to 19,890.94, while the S&P 500 inched higher by 0.03 percent to 2,279.55, and the Nasdaq added 0.5 percent to 5,642.65.

Overnight, the Federal Reserve kept its benchmark overnight lending rate target at 0.5 percent to 0.75 percent, and its statement noted that there were improvements to sentiment.

"Measures of consumer and business sentiment have improved of late," the Federal Open Market Committee said in its statement, using new language that jibes with voices on Wall Street following the election of Donald Trump as president.

The Fed raised rates for just the second time in a decade at its December meeting, and it also hinted at the possibility of three rate hikes this year.

"The Fed has shown a united front when it comes to keep the interest rate at a current level. This pretty much signals to the market that they were ahead of themselves and we may not see three rate hikes this year either," said Naeem Aslam, chief market analyst at ThinkMarkets, in a note on Thursday.

"The reality is that the Fed is very much shaken by the new U.S. president and his uncertain bold actions," Aslam said.

In other Trump-related news, geopolitical tensions spilled into the crude oil market after the U.S. President took an aggressive stance towards Iran for test-firing a ballistic missile.

Tehran confirmed that it fired a new missile test on Wednesday but said it did not violate the nuclear deal, while U.S. national security adviser Michael Flynn said otherwise, and that the U.S. is "officially putting Iran on notice," Reuters reported.

Oil prices rose sharply after Flynn's comments on concerns that Trump could take action that would hurt Iran's efforts to revive its oil and gas industry. Both U.S. crude and Brent crude settled up more than $1 per barrel on Wednesday during U.S. hours.

Trump subsequently issued a tweet that Iran's influence in neighboring Iraq has expanded.

During Asian trade, U.S. crude fell 0.46 percent to $53.63 a barrel, as Brent crude dropped 0.35 percent to $56.60, likely due to the Energy Information Administration's data revealing that U.S. crude stockpiles rose by 6.5 million barrels last week, surpassing analyst expectations for an increase of just 3.3 million barrels.

On the economic data front, investors await the Bank of England's (BOE) monetary policy decision, which is widely expected to be a no change to interest rates, after the U.K. economy continued to beat gloomy forecasts since the EU referendum last June.

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