Korea angst shows signs of abating as stocks rise

SYDNEY — Worry emanating from an escalation of tensions between the US and North Korea showed signs of easing on Monday (Aug 14) as shares in Asia outside Japan climbed together with US equity-index futures.

The yen weakened and gold halted its advance amid efforts from U.S. officials to tamp down fears of imminent nuclear war with North Korea. South Korean, Australian and Hong Kong shares rallied, while equities in Tokyo declined as traders returned from holidays during which markets sold off. Bitcoin rose in early Asian trading, and is now about 20 per cent since Wednesday.

Volatility gauges soared last week after markets were jolted by the sudden increase in tensions between the US and North Korea. Attention now turns to economic data in China followed by earnings results from the country’s Internet titans, Tencent and Alibaba.

Just a week ago, global equities reached all-time highs on expectations for a sustained global recovery in the face of tighter US monetary policy. The latest reading on core prices showed a below-forecast rise, making it tougher for the Federal Reserve to stay on its tightening course.

“Aside from some political uncertainty that I believe the market will soon look beyond, earnings and economic data remain robust,” said Mr Nick Savone, New York-based managing director at Morgan Stanley.

Central Intelligence Agency Director Mike Pompeo and national security adviser HR McMaster, in separate Sunday talk show appearances, said there was no indication that war will break out.

In China, production and consumption numbers are expected to show slower growth on Monday. Factory output probably increased 7.1 per cent in July from a year earlier, against 7.6 per cent in June, with retail sales decelerating to 10.8 per cent from 11 per cent.

That follows Japan data showing growth topped estimates in the second quarter, reflecting better domestic demand.

Japan’s Topix index fell as much as 1.3 per cent and was 0.9 per cent lower as of 10.33am in Tokyo. South Korea’s Kospi index advanced 0.6 per cent.

Australia’s S&P/ASX 200 Index rose 0.4 per cent. In Hong Kong, the Hang Seng Index gained 0.9 per cent.

The yen dropped 0.2 per cent to 109.41 per dollar. That follows a 0.3 per cent slide in the Bloomberg Dollar Spot Index on Friday, sparked by the latest CPI report. The dollar index was little changed. The euro was at US$1.1826. The Aussie dollar bought 79.09 US cents and the kiwi dollar rose 0.1 per cent to 73.13 US cents. BLOOMBERG