Asian markets moved narrowly on Wednesday as investors take a breather from recent gains while keeping an eye on Capitol Hill as US lawmakers close in on a massive tax overhaul.
Equities have been on a broad upswing since last week when holdout Republican senators said they would back Donald Trump’s headline legislation, which dealers are betting will fire up the world’s number one economy.
The House of Representatives passed the bill on Tuesday but will have to revote owing to a rules mix-up. It then moves to the Senate before being put on Trump’s desk to be signed off.
However, all three main Wall Street indexes ended Tuesday in the red — having clocked up a series of record closes of late — and the weak lead kept Asia tethered.
Hong Kong was down 0.1 percent and Shanghai lost 0.2 percent while Singapore shed 0.3 percent.
Tokyo ended the morning down 0.1 percent, while Seoul and Sydney were marginally higher.
Manila, Jakarta and Kuala Lumpur fell as Taipei and Wellington edged up.
Expectations that the massive reduction in corporate taxes would boost company profits have helped fuel the surge in equities but forex traders are more reticent about the effect on the economy, which has prevented the dollar from breaking out.
“After all is said and done doubts about the overall economic impact from the US tax bill capped the dollar gains as the dollar sold off versus the yen and held losses against the euro after the House approved the bill,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“Currency traders continue to think the economic bump will be small while there’s increasing chatter that the markets have likely overemphasised the impact of tax repatriation flows in the overall dollar narrative.”