Asia stocks dip; Flynn resignation hits dollar

Asian markets dipped yesterday after a three-day rally but analysts said there was likely room for further gains as traders bet President Donald Trump will help fire up the US economy.Shares around the world have resumed their Trump surge since the tycoon promised Thursday to unveil details of tax reform, while also softening his stance on key trade partners China and Japan.While most markets across Asia were in the red yesterday, there was some support from data showing a surge in Chinese factory gate prices, indicating a further pick-up in the world’s number two economy.Tokyo’s Nikkei index tumbled 1.1% on profit-taking and as the yen rebounded against the dollar after Trump’s national security adviser Michael Flynn resigned over his contacts with Russia.“The news dampens slightly the expectations for a smooth implementation of various policies,” Minori Uchida, head of global market research at Bank of Tokyo-Mitsubishi UFJ, told Bloomberg News.But he added: “Market expectations on Trump are about his economic policies, and while Flynn’s post is significant, it isn’t directly related.”Hong Kong and Shanghai were barely moved as profit-taking overshadowed news that China’s producer price index hit 6.9% in January – its highest level since 2011.The PPI is closely watched as a guide to future consumer prices. The consumer price index also improved, rising 2.5%.There are hopes the rise in inflation will put upward pressure on prices around the world, fuelling much-needed inflation to spur the global economy.In other markets Seoul slipped 0.2% and Sydney reversed morning gains to finish 0.1% off. Singapore shed 1.2%, while Manila, Jakarta and Bangkok also slipped.The losses came despite another record close on Wall Street and healthy gains in Europe, where dealers cheered an upward revision of eurozone growth for this year and next.However, Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a note that confidence was rising and dealers were putting “faith in Donald Trump’s ability to deliver and implement his transformative policies for the US economy”.He added that “traders are betting his focus is back on the positive aspects of the tax, regulatory and growth aspects of his policy platform”.