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Asia markets trade higher as investors eye details on Trump's tax reform plans

Asian markets finished mostly higher on Monday, searching for direction, as investors await further details from President Donald Trump on his economic policies, including tax reforms.

Japan's Nikkei 225 index finished near flat at 19,251.08, reversing earlier losses of nearly 0.6 percent as the yen weakened against the dollar to trade at 113.12 at 3:12 p.m. HK/SIN, falling from an earlier high of 112.75, but remained stronger than levels below 114.4 from the previous week.

Kazuhiro Nogi | AFP | Getty Images

A stronger yen generally weighs on export-oriented stocks in Japan as it affects their overseas profit margins when funds are converted to the local currency.

Among exporters, Toyota climbed 0.50 percent, Sony fell 1.10 percent, Honda was off 0.33 percent and Canon shed 0.30 percent.

Government data showed Japan's exports rose 1.3 percent on-year in January, less than the Reuters' median estimate of a 4.7 percent annual increase. Japanese exports to the U.S. fell 6.6 percent in January, while imports increased 11.9 percent. The overall trade balance came to a deficit of 1.09 trillion yen ($9.66 billion), compared with the median estimate for a 636.8 billion yen deficit, while Japan still enjoyed a trade surplus with the U.S. in January.

Harumi Taguchi, principal economist of IHS Global Insight, said in a note the trade surplus with the U.S. could continue to narrow from the increased imports of liquefied natural gas. She added, "Although this will help narrow Japan's trade surplus against the U.S., the surplus is expected to be a major topic after the high-profile meeting between President Donald Trump and Prime Minster Shinzo (Abe)."

SoftBank shares added 3.18 percent after a report said the company was willing to give up control of Sprint to T-Mobile U.S. to secure a merger between the two telecoms.

Across the Korean Strait, South Korea's Kospi index climbed 3.81 points, or 0.18 percent, to 2,084.39.

Shares of Samsung Electronics closed up 2.11 percent at 1,933,000 Korean won. Reuters reported Samsung group chief Jay Y. Lee, who was arrested on Friday and spent the night in a detention cell, was taken on Saturday for questioning by South Korean authorities.

Lee is a suspect is an ongoing investigation into a corruption scandal that has led to the impeachment of President Park Geun-hye. Analysts told CNBC last week Lee's arrest was unlikely to have any impact on Samsung's global brand.

In Hong Kong, the Hang Seng index was up 0.61 percent in late afternoon trade, while Chinese mainland shares also advanced.

The Shanghai composite gained 39.38 points, or 1.23 percent, to 3,241.45, while the Shenzhen composite added 17.42 points, or 0.89 percent, to 1,962.52. The blue-chip CSI 300 index posted gains of 1.5 percent to 3,472.36, following media reports that pension funds may begin flowing into the Chinese stock market as early as this week.

Australia's shares fell, with the ASX 200 closing down 10.72 points, or 0.18 percent, to 5,795.09, with most sectors lower.

WorleyParsons shares dropped 12.78 percent after the company reported a fiscal first-half net loss of 2.4 million Australian dollars, compared with a profit of A$23.1 million in the year-earlier period.

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 modest market movements in the region echoed Wall Street's performance on Friday.

"President Trump promised a 'phenomenal' tax announcement in 2-3 weeks, so as the clock ticks down to some form of announcement, market inertia is set to reign," said Ray Attrill, global co-head of foreign exchange strategy at the National Australia Bank, in a note.

Attrill said that inertia was conveyed by markets on Friday, but he also acknowledged the absence of market-moving data. "U.S. equities recouped early session losses to end Friday slightly in the black and the U.S. dollar tracked equities higher despite a fall in U.S. yields."

U.S. markets are closed on Monday for a public holiday.

Mizuho Bank's Vishnu Varathan said markets were grappling with what he called the "Donald Disconnect" — which he defined as "bets on economic rebound without accompanying reflations."

The optimism in markets, Varathan said, was driven by expectations of tax reforms, deregulation and infrastructure capex, which fueled equity markets but did not invoke higher U.S. yields and an accompanying surge in the dollar.

On Monday at 3:21 p.m. HK/SIN, the dollar index, which measures the greenback against a basket of currencies, traded at 100.84, up from levels around 100.62 from Friday afternoon Asia time.

Analysts at Singapore's DBS Bank said the greenback has been struggling with a cyclical recovery in the rest of the world and that "Trump's protectionist biases (are) discouraging further dollar appreciation."

Meanwhile, the Australian dollar traded at $0.7685, while the euro was at $1.0622.

Oil traded marginally higher, with U.S. crude up 0.34 percent at $53.58 a barrel, while global benchmark Brent added 0.43 percent to $56.05 at 3:23 p.m. HK/SIN.