Asian markets advanced on Friday, with Shanghai gaining 2 percent as China’s weak yuan currency defied US President Donald Trump’s criticism of a strong US dollar and US Federal Reserve rate hikes.
Trump, in part of an interview aired by US television network CNBC, broke with the long-established executive branch practice of not commenting on the Fed’s decisions out of respect for its independence.
“I’m not thrilled,” Trump told the network in an interview excerpt aired on Thursday. “Because we go up, and every time you go up they want to raise rates again.”
Trump also suggested that higher interest rates left the US at a disadvantage compared with the EU, China and Japan, allowing their currencies to weaken as the US dollar strengthens.
“Currency is now part of the trade war folks,” AxiTrader chief market strategist Greg McKenna said. “It is worth pondering whether this is a president who is going to break with 25-30 years of tradition in not interfering in Fed policy deliberations going forward.”
“What I saw in that brief excerpt is a president who is going to drive his trade and tariff policy forward, regardless of outside objections,” McKenna added.
The US dollar index fell after the remarks were broadcast and a stronger yen saw Tokyo’s Nikkei 225 on Friday fall 66.8 points, or 0.3 percent, to 22,697.88. The index finished up 0.4 percent from 22,597.35 on July 13.
However, China’s yuan largely continued its steady decline against the US dollar, providing Beijing with a buffer against the punitive tariffs as the Shanghai Composite on Friday rose 56.73 points, or 2 percent, to 2,829.27, but shed 0.1 percent from a close of 2,831.18 a week earlier.
Hong Kong stocks also ended higher, as the sharp rebound in Chinese stocks lifted sentiment.
The Hang Seng on Friday rose 213.62 points, or 0.8 percent, to 28,224.48, but fell 1.1 percent from 28,525.44 on July 13.
Hang Seng fell to nine-month lows in early trading, but reversed losses as Chinese stocks staged a sharp rebound.
In Taipei, the TAIEX on Friday closed up 96.73 points, or 0.89 percent, at 10,932.11 on turnover of NT$164.46 billion (US$5.35 billion). That was a jump of 0.6 percent from 10,864.54 on July 13.
Taiwan Semiconductor Manufacturing Co (台積電) rose 5.7 percent to close at NT$237.50, while smartphone camera lens supplier Largan Precision Co (大立光) rose 4.25 percent to NT$5,270, its highest since Nov. 29 last year.
Largan’s rise pulled second-tier optical stocks higher, including Genius Electronic Optical Co (玉晶光) and Asia Optical Co (亞洲光學), analysts said.
However, passive component, disc and silicon wafer companies were relatively weak, indicating that the market’s structure is changing, they said.
Investors flocked to bellwether stocks in the electronics and financial sectors, leaving the stocks of small or medium-sized companies vulnerable to selling pressure, they added.
The financial sector closed up 0.16 percent, with Mega Financial Holding Co (兆豐金控) rising 0.19 percent to end at NT$26.90 and CTBC Financial Holding Co (中信金控) gaining 0.49 percent to close at NT$20.50.
Additional reporting by staff writer and CNA
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