Dollar rebounds, Asian stocks gain as N.Korea missile fears recede

Reuters Singapore | Updated on January 09, 2018 Published on August 30, 2017
Markets so far seemed to be dismissing North Korea's statement on Wednesday. File Photo

Markets so far seemed to be dismissing North Korea's statement on Wednesday. File Photo

Asia ex-Japan stocks flat and Nikkei up on weaker yen

The dollar rebounded from a 2-1/2-year low on Wednesday, and Asian stocks took their cue from Wall Street's stronger close, as concerns about North Korea's firing of a missile over Japan ebbed.

European stocks are also set for a positive start, with financial spreadbetter CMC Markets expecting Britain's FTSE 100 to open up 0.35 per cent. Germany's DAX and France's CAC are expected to begin the day 0.5 per cent higher.

The dollar index, which tracks the greenback against a basket of six major peers, edged up 0.1 per cent to 92.332.

The dollar rose 0.1 per cent to 109.79 yen. On Tuesday, after slumping to a 4-1/2-month low versus the safe haven currency, the greenback closed up 0.5 per cent.

Geo-political crisis

The yen tends to benefit during times of geo-political or financial stress because Japan is the world's biggest creditor nation and there is an assumption that Japanese investors will repatriate funds in a crisis.

“Calmer heads have prevailed once again in financial markets, with traders seemingly happy to cover short positions and add a touch of risk into their portfolio,” said Chris Weston, chief market strategist at IG in Melbourne.

The South Korean won strengthened 0.4 per cent, with the dollar buying 1,122.2 won, recovering some of Tuesday's 0.6 per cent slide.

UN condemns missile attack

The United Nations, in a statement drafted by the United States, has condemned the North Korea's latest missile launch but held back any threat of new sanctions against Pyongyang.

Markets appeared to have dismissed North Korea's statement on Wednesday that the test was a first step in military action in the Pacific to “contain” the US territory of Guam.

North Korean media reports on the launch lacked their usual claims of technical advances, indicating the test may not have succeeded as planned.

Non-farm payrolls data

Currency traders are now looking to US non-farm payrolls data for August, due on Friday, following data that showed US consumer confidence surged to a five-month high in August as the labour market improved and house prices rose.

“The market tone markedly improved as traders adopted a 'this too shall pass' attitude,” said Stephen Innes, head of Asia Pacific trading at OANDA in Singapore.

“A boisterous US consumer confidence number, coupled with a much tamer response than anticipated from President Trump may explain part of the reversal.”

US Treasury yields

US 10-year Treasury yields were at 2.1466 per cent on Wednesday, after touching a 9-1/2-month low of 2.086 per cent on Tuesday.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.6 per cent. South Korea's KOSPI share index rose 0.1 per cent, while Australian shares were little changed. Japan's Nikkei rose 0.7 per cent.

Japan retail sales

Japanese retail sales growth slowed in July but still grew for a ninth consecutive month, suggesting the underlying trend for consumption remains healthy.

However, household spending unexpectedly fell in July, injecting some caution into the debate about whether domestic demand can continue to drive growth.

Chinese blue chips rose slightly, and Hong Kong's Hang Seng climbed 0.9 per cent.

US gasoline prices

In commodities, gasoline hit a two-year high after Hurricane Harvey shut down nearly a fifth of USrefining capacity, and more closures are expected. US gasoline futures rose 3.1 per cent to $1.838, bringing gains this week to 10.3 per cent.

The rise in crude inventories as a result of refinery shutdowns, however, weighed on oil prices. US crude futures fell 0.3 per cent to $46.32 a barrel, after touching a five-week low on Tuesday. Global benchmark Brent slipped 0.4 per cent to $51.79.

Spot gold inched up 0.2 per cent to $1,311.77 an ounce on Wednesday. On Tuesday, the precious metal had jumped to its highest since Trump was elected US president, before closing flat.

Published on August 30, 2017
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