Asia: Markets mixed as traders take stock after Fed-fuelled rally

ASIAN markets fluctuated between gains and losses Monday as investors took a step back after last week’s rally fuelled by the Federal Reserve’s interest rate cut.

Tokyo led the winners after Japan’s central bank said it would sell off its huge stock of exchange-traded funds (ETFs) gradually, having sparked a sell-off Friday by announcing plans to offload the holdings as part of a shift away from its loose monetary policy.

Investors also took some heart from talks between Donald Trump and Chinese leader Xi Jinping on Friday that the US president said “made progress on many very important issues” including a deal to sell blockbuster social media app TikTok.

He added that the pair would meet Xi on the sidelines of an Asia-Pacific Economic Cooperation summit in South Korea at the end of next month and that he would travel to China next year.

“While lacking apparent substance... it does look to have helped create a positive atmosphere to enable extention of the ongoing US-China detente,” said National Australia Bank’s Ray Attrill.

Equities have enjoyed a healthy run-up in recent months on optimism that the US central bank will lower borrowing costs as worries over a softening labour market trump stubbornly high inflation.

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Tokyo was the stand-out performer on Monday, rising more than one per cent, after the Bank of Japan said it would sell its ETFs - bought as part of a campaign of monetary easing aimed at kickstarting the sluggish economy - gradually.

Its announcement on Friday that it planned to offload its stockpile sent shivers through Japanese markets, sending the Nikkei sharply lower.

Monday’s gains came after officials said they would trim the holdings steadily, at a pace observers said would take around 100 years to complete.

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There were also gains in Shanghai, Sydney, Seoul, Singapore and Taipei, while Hong Kong, Wellington, Manila and Jakarta fell. AFP