Asian mar­ket bounces from early losses

Kuwait Times - - BUSINESS -

Asian mar­kets re­bounded to sit mostly higher yes­ter­day as early ner­vous­ness over North Korea’s lat­est sabre-rat­tling gave way to bar­gain-buy­ing fol­low­ing the pre­vi­ous day’s steep losses. Traders ran for the side­lines in the morn­ing af­ter Wash­ing­ton con­firmed that Py­ongyang had for the first time tested a missile ca­pa­ble of reach­ing the United States, ratch­et­ing up pres­sure on the al­ready tense Korean penin­sula. But in the af­ter­noon the sell­ing and rush for safe-haven as­sets such as the Ja­panese yen re­versed.

By the close Tokyo was up 0.3 per­cent, while Seoul also added 0.3 per­cent and Sin­ga­pore jumped 0.8 per­cent. Hong Kong gained 0.5 per­cent in late trade af­ter div­ing 1.5 per­cent Tues­day, and Shang­hai ended 0.8 per­cent up. How­ever Syd­ney fin­ished 0.4 per­cent off while Welling­ton and Jakarta also edged down. De­spite the gains, deal­ers re­main on edge and are now await­ing the next de­vel­op­ment af­ter Rus­sia and China is­sued a joint ap­peal to ease ten­sions while the United Na­tions Se­cu­rity Coun­cil will hold an emer­gency meet­ing later in the day.

The test came just as the US was prepar­ing to cel­e­brate In­de­pen­dence Day and days be­fore a G20 sum­mit, where it will likely top the agenda. It was the lat­est provo­ca­tion by North Korean leader Kim Jong-Un who is de­ter­mined to de­velop a nu­clear weapons pro­gram he says is needed to ward off in­va­sion. South Korea and the US yes­ter­day launched a bar­rage of missiles sim­u­lat­ing a pre­ci­sion strike against Py­ongyang, in response to the provo­ca­tion.

“Traders and in­vestors may be won­der­ing what re­ac­tion this lat­est missile test will get,” said Greg McKenna, chief mar­ket strate­gist at Ax­iTrader. Traders were given few leads with Euro­pean mar­kets slightly down and Wall Street closed for the July 4 hol­i­day. Tech firms saw some much needed buy­ing af­ter suf­fer­ing a re­cent sell-off as global cen­tral banks con­sider tight­en­ing mon­e­tary pol­icy.

The sec­tor has been a huge ben­e­fi­ciary of the years of cheap bor­row­ing from len­ders, send­ing their stock prices soar­ing, but the prospect of an end to such largesse has led to profit-tak­ing. Hong Kong-listed Ten­cent edged up from Tues­day’s fall of more than four per­cent, while AAC Tech­nolo­gies also bounced and Sony jumped 0.8 per­cent in Tokyo. In­vestors are await­ing the re­lease of min­utes from the Fed­eral Re­serve’s June pol­icy meet­ing and key US jobs data to­mor­row.

Euro­pean mar­kets wob­ble

Mean­while, Euro­pean stock mar­kets wob­bled yes­ter­day on in­vestor jit­ters over North Korea’s lat­est saber-rat­tling. Lon­don sagged 0.1 per­cent while Frank­furt and Paris eked out slen­der gains of 0.1 per­cent. “In­vestors over in Europe are not ig­nor­ing the bout of risk aver­sion trig­gered by North Korea’s on­go­ing missile tests,” said an­a­lyst Naeem As­lam at trad­ing firm Think Mar­kets. “The geopo­lit­i­cal ten­sions re­main a ma­jor threat for the global sta­bil­ity and eco­nomic health and traders would not ig­nore this fact.”

Traders ran for the side­lines af­ter Wash­ing­ton con­firmed that Py­ongyang had for the first time tested a missile ca­pa­ble of reach­ing the United States, ratch­et­ing up pres­sure on the al­ready tense Korean penin­sula. Sen­ti­ment was some­what sub­dued with Wall Street hav­ing been shut Tues­day for the In­de­pen­dence Day hol­i­day. In­vestors mean­while waited for the pub­li­ca­tion of min­utes from the US cen­tral bank’s most re­cent meet­ing, ahead of key jobs data to­mor­row. “The Fed­eral Re­serve will re­lease the min­utes from the June meet­ing and in­vestors will get an in­sight into what the US cen­tral bank was think­ing when it raised in­ter­est rates for the sec­ond time this year,” said CMC Mar­kets an­a­lyst David Mad­den. “Since then, Janet Yellen, the chair of the Fed­eral Re­serve an­nounced there will be fur­ther mon­e­tary tight­en­ing, but it will be ‘timely and pre­dictable’.”

The Fed last month raised its bench­mark in­ter­est rate by a quar­ter point to 1.0-1.25 per­cent. The US cen­tral bank said it ex­pected to lift bor­row­ing costs for a third time this year, brush­ing aside weaker in­fla­tion and con­sump­tion data in re­cent weeks. Ear­lier yes­ter­day, Asian equity mar­kets re­bounded to sit mostly higher as early ner­vous­ness over North Korea gave way to bar­gain-buy­ing.

De­spite those gains, deal­ers re­main on edge and are now await­ing the next de­vel­op­ment af­ter Rus­sia and China is­sued a joint ap­peal to ease ten­sions while the United Na­tions Se­cu­rity Coun­cil will hold an emer­gency meet­ing later in the day. The test came just as the US was prepar­ing to cel­e­brate In­de­pen­dence Day and days be­fore a G20 sum­mit, where it will likely top the agenda.

It was the lat­est provo­ca­tion by North Korean leader Kim Jong-Un who is de­ter­mined to de­velop a nu­clear weapons pro­gram he says is needed to ward off in­va­sion. South Korea and the US on Wed­nes­day launched a bar­rage of missiles sim­u­lat­ing a pre­ci­sion strike against Py­ongyang, in response to the provo­ca­tion. “Traders and in­vestors may be won­der­ing what re­ac­tion this lat­est missile test will get,” said Greg McKenna, chief mar­ket strate­gist at Ax­iTrader. — Agen­cies

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