By Koh Gui Cheng and Ankur Banerjee
NEW YORK/SINGAPORE (Reuters) – Global shares rose on Friday on the prospect of lower U.S. interest rates following comments from President Donald Trump, while the yen stabilized ahead of a widely expected rate hike from the Bank of Japan later in the day.
In a sign of the policies to come, Trump told business leaders at the World Economic Forum in Davos, Switzerland, on Thursday that he wants to lower global oil prices, interest rates and taxes, and warned of tariffs on exports to the United States.
“I will demand interest rates go down immediately. Likewise, they must go down all over the world,” Trump said from Washington via video conference on Thursday.
The comments moved markets, with the record higher and the dollar on the defensive as investors remain cautious about Trump's next moves on trade and tariffs.
“There is no political advocate for high rates, and (Trump) has always positioned himself as the low-rates guy,” said Prashant Nainaha, an Asia-Pacific strategist at TD Securities. “We expect the president to become more vocal and critical of the Fed study.”
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.29%, in line with Wall Street, while China's blue chip index was little changed in early trading.
Investors continued to digest plans announced by China on Thursday to channel hundreds of billions of yuan of investment from state-owned insurance companies into stocks.
With no new details about Trump's tariff plans, uncertainty is weighing on bond prices. Treasury yields have been on the rise as bond investors brace for tariffs that could eventually wreak havoc on inflation.
the
“Trump has already signaled a desire for lower rates before his return, and the US data simply does not allow for the level of easing Trump wants without lighting a match under inflation,” said Matt Simpson, chief market analyst at City Index.
Waiting for BOJ
The spotlight of the day will be on the BOJ, with the European Central Bank and the Federal Reserve scheduled to meet next week as policymakers digest the Trump administration's early moves.
Markets are already fully priced in a BOJ 25 paise rate hike that would take prices in Japan to their highest levels since the 2008 global financial crisis.
The lack of immediate announcements on tariffs from Trump in his early days, said Christina Clifton, an economist at the Commonwealth Bank of Australia (OTC:), with the president backing a view of markets on the rise on Friday.
“In our view, if BOJ is increasing today, there is a good chance there will be a dovish tone because there is still a significant risk of economic and market disruption from US policy.”
The yen was flat at $156.21 per dollar, close to the month-high of 154.78 touched earlier this week, while yields on Japanese government bonds rose as they reached a decision. It was up 0.38% in early trading.
Currency markets were generally tentative after a few choppy sessions since Trump returned to the White House, driven by his comments on tariffs.
Trump said he plans to impose duties on imports from Mexico and Canada from February 1 and said he will apply tariffs to imports from the European Union.
which measures the currency against six others, is near a two-week low of 108.13 and was poised to fall more than 1% for the week, its weakest performance in two months. (FRX/)
Oil prices remained well below $80 a barrel, under pressure after Trump said he would ask Saudi Arabia and OPEC to lower oil prices.
Futures fell 0.56% to $77.85 a barrel. US West Texas Intermediate (WTI) crude oil was down 0.51% at $74.24 (O/R)
