TOKYO- Asia-Pacific equity markets were mixed on Thursday as investors weighed the implications of a Donald Trump presidency, while also eyeing monetary policy decisions from the US Federal Reserve and other major central banks later in the day.
Though potential for a Republican sweep quickly ushering in big fiscal spending sent all three major US share indexes surging to record peaks, strong gains were not seen in Asia.
US Treasury yields soared on the risk of higher deficits, helping lift the dollar to its biggest one-day gain in more than two years versus major peers on Wednesday.
The euro was under additional pressure after German Chancellor Olaf Scholz sacked his Finance Minister Christian Lindner, causing the ruling three-party coalition to collapse.
The mixed reaction for Asian stocks was underscored in Japan as the tech-heavy Nikkei 225 reversed initial gains to be down 0.44 percent at 39,308.55, while the broader Topix remained up 0.88 percent.
Elevated bond yields – with the 10-year US Treasury yield at 4.4236 percent, hovering close to Wednesday’s four-month peak of 4.4790 percent, and equivalent-maturity Japanese government bond yields rising to 1 percent for the first time in three months – buoyed shares of Japanese banks and insurers, but weighed on tech names and other growth stocks.
“In this highly volatile period, you have to be very selective in Japan,” said Frank Benzimra, head of Asia equity strategy at Societe Generale, adding that the Nikkei looks overextended.
“When we have the Nikkei at this level, I feel very uncomfortable.”
Elsewhere, South Korea’s Kospi edged down 0.14 percent, while Australia’s equity benchmark slipped 0.24 percent, hurt by weakness in gold stocks after bullion slumped against a strengthening dollar.
Chinese markets, which lost ground on Wednesday due to the likelihood of higher tariffs under another Trump presidency, rebounded in the latest session. Hong Kong’s Hang Seng rose 0.49 percent and mainland blue chips added 0.14 percent.
