Asia markets extend gains on ‘Sell America’ inflows, Trump’s Iran tariff threat; Nikkei at record high

[SINGAPORE] Asian markets extended gains on Tuesday (Jan 13) as the momentum from a global rotation out of US assets continued despite fresh geopolitical warnings from US President Donald Trump.

While the Sell America” trade lifted regional indices on Monday, sentiment was tested this morning by Trump’s vow to impose a 25 per cent tariff on countries doing business with Iran, alongside lingering unease over the Federal Reserve probe.

The tariff announcement, made on social media overnight, also added that the new duty would be “effective immediately”. It did not provide details about the scope or implementation of the charges, increasing pressure on Teheran amid widespread anti-government protests. Iran’s major trading partners include China, India, and Turkey.

In Singapore, the Straits Times Index opened 0.3 per cent higher, climbing to 4,781.63 points as at 9.18 am. In Japan, the Nikkei jumped 3.6 per cent to a record 53,814.79 in early trade, and Hong Kong’s Hang Seng Index was up 1.3 per cent at around the same time, while Shanghai’s CSI 300 gained 0.2 per cent by 9.25 am.

South Korea’s Kospi rose about 1.1 per cent and Malaysia’s Kuala Lumpur Composite Index was up about 0.3 per cent. Tokyo’s Topix also gained about 2.3 per cent, while Taiwan’s Taiex opened 1.2 per cent higher.

Asian flavour

Despite weeks of advance, Asian stocks are still drawing global institutions with their cheaper valuations and regional growth prospects. The shift coincides with the outflow of funds from fully valued US stocks amid rising risks.

The MSCI Asia Pacific Index trades at about 15 times earnings, compared with about 22 times for the S&P 500 and 25 times for the Nasdaq 100, according to data compiled by Bloomberg.

Trump’s attack on the US Fed is also troubling investors as it adds a new risk that could raise bond yields.

Iranian unrest

Iran has been convulsing from weeks of mass unrest – initially sparked by a currency crisis and worsening economic conditions, but has increasingly been aimed at the regime.

Trump warned the Iranian regime against violently repressing the demonstrations, and said earlier that the US “stands ready to help.”

Iran has warned both the US and Israel against any attempt to intervene.

Parliament Speaker Mohammad Bagher Ghalibaf said: “In the event of a US military attack, both the occupied territories and US military and shipping centres will be legitimate targets for us.”

He reiterated a warning that Iran could act preemptively against potential threats. “Within the framework of legitimate self-defence, we do not limit ourselves to responding only after an attack,” he said.