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Amazing what the prospect of a bit of red tape-cutting can do for bank shares.
Sentiment toward financials across Asia received a broad boost on Monday as investors mulled the possibility that US President Donald Trump could soon sign executive orders paving the way to dismantle parts of the Dodd-Frank legislation, the financial reform law introduced after the financial crisis.
News of the proposed overhaul, revealed by National Economic Council chairman Gary Cohn in an interview with the Wall Street Journal, broke shortly after Japanese and Australian markets closed on Friday.
The development was welcomed by Wall Street, though, with bank stocks featuring heavily among the top performers on Friday, helping push the S&P 500 to within one point of a record closing high.
Sentiment toward financials has since been strong, with even peers in Asia that don’t have any or substantial exposure to the US coming along for the ride.
For instance, many banks in Japan are domestically focused, and some of the country’s banks and brokers with overseas exposure aren’t necessarily among the best performers. Likewise, the Australian commercial banks are primarily focused on the domestic and New Zealand markets.