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FILE PHOTO: A U.S. Dollar note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo

Asian Stocks Rebound as North Korean Fears Abate: Markets Wrap

(Bloomberg) — Asian stocks advanced after President Donald
Trump’s measured response to North Korean missile launches and
comments from Kim Jong Un suggested geopolitical tensions will
ease off. The yen fell for a second day.
Equity indexes in Japan, South Korea and Hong Kong gained
after U.S. stocks rebounded from losses initially sparked when
Kim’s regime fired a missile over Japan. The yen rallied on
Tuesday as safe havens advanced, only to more than give up those
gains as investors speculated the event won’t flare up. Bond
yields rose as risk assets came back in favor and gold held at
the highest level this year. Gasoline advanced for a seventh day
as Tropical Storm Harvey picked up strength again.
Asian markets were roiled on Tuesday after North Korea
fired a ballistic missile over Japan in an act the latter called
an “unprecedented, grave and serious threat.” Trump said the
U.S. will consider “all options” in its response. Kim said
Wednesday the missile was in protest at annual military
exercises between the U.S. and South Korea. That suggests the
standoff is unlikely to intensify and, coupled with Trump’s
tempered remarks, helped underpin risk assets.
“We’ve seen the typical reaction that you would expect
yesterday, with the safe haven assets like the yen gaining and
the Korean won obviously weakening and equity markets in this
region selling off,” Khoon Goh, Australia & New Zealand Banking
Group Ltd.’s head of Asia research, said in a Bloomberg
Television interview. “What’s interesting is that the reaction
has been fairly muted and a lot of the moves have largely
reversed and I think it’s a case now where what’s happening with
North Korea is not necessarily new.”
Terminal subscribers can read more on our Markets Live
blog.
Among other key events looming this week:
* Inflation data from the euro zone’s largest economies this
week may show prices nudged up in August.
* The U.S. updates second-quarter GDP and core price data on
Wednesday, and reports on August payrolls on Friday.

And here are the main moves in markets:

Stocks

* The Topix index rose 0.5 percent as of 10:42 a.m. Tokyo time
and the Kospi index edged up. Australia’s S&P/ASX 200 Index
swung between gains and losses.
* The Hang Seng Index in Hong Kong rose 0.9 percent, while the
Shanghai Composite Index rose 0.3 percent.
* Contracts on the S&P 500 Index climbed 0.1 percent. The cash
gauge finished Tuesday 0.1 percent higher.

Currencies

* The yen was down 0.1 percent at 109.82 per dollar after
dropping 0.4 percent.
* The Bloomberg Dollar Spot Index was little changed. It closed
Tuesday 0.2 percent higher after dropping to the lowest in more
than two years.
* The New Zealand dollar declined 0.3 percent to 72.34 U.S.
cents after the central bank governor said a lower currency was
needed.
* The Aussie dollar added 0.2 percent to 79.70 U.S. cents. It
extended gains after Australian building approvals declined less
than expected in July.
* The euro was steady at $1.1973, after touching the strongest
in almost three years.

Bonds

* The yield on 10-year Treasuries rose two basis point to 2.15
percent. It dropped as low as 2.08 percent on Tuesday, the least
in 10 months.
* Australian 10-year note yields advanced four basis points to
2.67 percent.

Commodities

* West Texas Intermediate crude fell 0.3 percent to $46.31 a
barrel.
* Gold was at $1,311.44 an ounce after reaching the strongest
level in 11 months.
* Gasoline for September delivery rose 2.3 percent to $1.8250 a
gallon and is up more than 9 percent this week.

To contact the reporter on this story:
Andreea Papuc in Sydney at apapuc1@bloomberg.net
To contact the editors responsible for this story:
Christopher Anstey at canstey@bloomberg.net
Garfield Reynolds

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