'Trump trade' boosts dollar, Asian stocks await China housing policy news

Asian shares steadied on Thursday ahead of a housing policy briefing in China that has raised expectations of support for the ailing property sector, while the dollar stood near 2-1/2 month highs on the prospect of a Donald Trump presidency.

Global bonds rallied after a surprisingly large drop in British inflation and as the European Central Bank is expected to announce its first back-to-back rate cut in 13 years.

Results at chipmaking giant TSMC will be in focus after a soft outlook from equipment supplier ASML.

Japan's Nikkei was up 0.2 per cent in early trade and Australian shares rose 1 per cent to hit a record high, led by the banking sector which had also performed strongly on Wall Street.

 

The US dollar stood near more than two-month highs as prediction markets showed Republican Trump leading the US presidential race. US futures wobbled lower after the main US indexes closed at or near record levels on Wednesday.

"It's probably only in the last two or three days that the concept of a Trump victory is getting the US dollar bid," said Damien McColough, head of rates strategy at Westpac, with Trump's tariff, tax and immigration policies seen as inflationary, negative for bonds and positive for the dollar.

"There's also the concept of a strong economy and less Fed rate cuts, so the two merge," he said. Trump and the Republicans are also seen as likely to apply a softer touch to cryptocurrency regulation. Bitcoin has rallied in recent sessions.

Bitcoin is up 15 per cent in a week to $67,615. Gold hovered at $2,677 an ounce, just short of record levels.

Chinese markets rose modestly at the open, with the Shanghai Composite up 0.5 per cent in early trade while Hong Kong's Hang Seng was 2 per cent higher.

Sterling slips

Global economic data on Thursday and Friday is also likely to be market-moving. In Asia, the Australian dollar bounced from a one-month low after data showed net employment blowing past forecasts and pushing out rate cut bets. [AUD/]

The Aussie dollar was last up 0.5 per cent at $0.6697 and three-year Aussie bond futures fell 8 ticks.

US retail sales data is due later on Thursday, and China on Friday is due to publish third-quarter gross domestic product numbers. On Wednesday, British inflation slowed sharply to an annualised 1.7 per cent, bolstering bets that the Bank of England could cut rates twice before Christmas.

Rates markets have priced a near 90 per cent chance of two 25 basis point rate cuts before year's end and the news sent sterling down 0.6 per cent to its lowest since Aug. 20 and helped push gilt and global bond yields lower.[GB/][GVD/EUR][US/]

Benchmark 10-year US yields were steady at 4.03 per cent in Asia and two-year yields held at 3.95 per cent. Sterling traded at $1.2993, near its overnight low. [GBP/]

"My guess is that London will probably sell GBP aggressively ... when they walk in," said Spectra Markets president Brent Donnelly in a note to clients, as traders digest the across-the-board slowdown in price pressures.

Elsewhere in foreign exchange trade, the euro was at $1.0862 and pinned near its lowest since early August and the yen traded at 149.40 per dollar.

In commodity trade, Brent crude futures steadied at $74.57 a barrel after four sessions of losses after industry data showed an unexpected drop in US crude stockpiles last week. [O/R]