Asian stocks come under pressure as dollar struggles

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By 2017-12-18

Asian markets closed mostly lower on Friday after US markets finished in the red on concerns about the future of tax reform stateside.

Japan's Nikkei 225 came under pressure, sliding 0.62 per cent, or 141.23, to close at 22,553.22, but was off session lows. Major exporters traded lower as the dollar lost ground against the yen. Toyota closed down 1.83 per cent and Honda was 1.02 per cent lower. Telcos also declined, with SoftBank losing 2.39 per cent and NTT Docomo tumbling 4.6 per cent by the end of the day.
Japan›s most recent tankan survey released on Friday showed large manufacturers' sentiment had improved for a fifth consecutive quarter, Reuters reported. The score of plus 25 recorded was the highest in 11 years, according to Reuters.

Across the Korean Strait, the Kospi edged up 0.51 per cent to end at 2,482.07 after it lost steam and closed lower on Thursday despite rallying more than 1 per cent earlier that day. Blue-chips contributed to gains on Friday. Hyundai Motor rose 2.33 per cent and Posco closed up 0.91 per cent, although heavyweight Samsung Electronics declined 0.86 per cent on the day.

Down Under, the S&P/ASX 200 closed 0.24 per cent lower at 5,997. Heavily-weighted financials were weaker, while major miners gained: Rio Tinto reversed early losses to climb 1.13 per cent and BHP was 0.04 per cent higher at the end of the session.
The Hang Seng Index declined 1.12 per cent by 3:10 p.m. HK/SIN as property and banking stocks slid. HSBC Holdings was down 1.13 per cent and Evergrande was lower by 3.46 per cent by that time. On the mainland, the Shanghai Composite closed 0.8 per cent lower at 3,266.15 and the Shenzhen Composite ended 0.72 per cent at 1,901.2, with technology among the worst-performing sectors on the day.

Tax worries in the USA
Investors stateside shifted their attention from the Federal Reserve's recent meeting to new uncertainty about the chances of tax reform.
Sen. Marco Rubio, R-Fla., on Thursday confirmed he opposes the Republican party's current tax plan. Other holdouts include Sen. Mike Lee, R-Utah, who has not yet made a decision on the Bill and Sen. Bob Corker, R-Tenn., who had opposed the Senate Tax Bill but has not signaled where he stands on the joint Bill.

Vice President Mike Pence delayed a trip to the Middle East amid uncertainty over passing the Bill in the Senate. Pence will be required to break a tie if at least two of the Senate›s 52 Republicans oppose the Tax Bill. US equities finished lower on Thursday after those doubts were raised, with the Dow Jones industrial average edging down 0.31 per cent, or 76.77 points, to close at 24,508.66. The dollar was on the back foot against a basket of currencies, likely to end the week lower as investors kept an eye on progress made over US tax reform. The dollar index traded at 93.552 at 3:02 p.m. HK/SIN after dipping as low as 93.282 in the last session. That compared with the 93.983 seen at the beginning of the week.

Against the yen, the greenback was little changed at 112.25, edging lower for a third straight session.

Goodbye, net neutrality
Also of note was the Federal Communications Commission's decision to scrap net neutrality regulations. Those rules ensured that telecommunication corporations had to give equal treatment to all internet traffic.

Elsewhere, the European Central Bank kept monetary policy steady on Thursday, but upgraded its growth forecast for the region from 2.2 per cent to 2.4 per cent this year. The euro was a touch firmer after falling in the previous session, trading at $1.1780 at 3:03 p.m. HK/SIN compared to a low of $1.1769 touched in the previous session.

"While Draghi's message was more hawkish than the market anticipated, the main takeaway is that even though the economy is improving, they have no plans to raise interest rates anytime soon," Kathy Lien, Managing Director for FX strategy at BK Asset Management, said in a note.

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