Asian stock exchanges extend climb as tensions in Korea ease

SYDNEY — Asian shares extended gains on Monday as tensions in the Korean Peninsula eased and first-quarter earnings shone, although some investors were cautious about the outlook amid the backdrop of a simmering USChina trade dispute.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.90% after gaining more than 1% on Friday. The index is poised to eke out a modest rise this month after two consecutive losses.

South Korea’s KOSPI index rose 0.60% and is set to end April nearly 2.5% higher following record profits from tech giant Samsung Electronics and after a spectacularly successful interKorean summit.

Hong Kong’s Hang Seng index climbed 1.6%, Australia’s benchmark index gained 0.50% while New Zealand shares gave up early losses to be up 0.30%.

Liquidity was low on Monday with Japan, China and India on holiday and much of Asia closed on Tuesday.

Overall, stocks continue to be supported by strong first-quarter corporate earnings. More than half of Wall Street’s S&P 500 companies have reported and 79.4% have beaten consensus estimates.

Analysts now expect earnings growth of 24.6%, more than double forecasts at the beginning of the year and thanks in large part to hefty tax cuts.

But investors have grown increasingly jittery with the US Federal Reserve signalling faster rate rises this year and the European Central Bank seen likely to end its generous bond-buying program soon.

“The key question for 2018 remains to what extent can the benign environment persist?” said Jacob Mitchell, Chief Investment Officer of Australian investment boutique Antipodes which has A$7 billion in assets under management.

Global shares had a dream run in 2017 helped by the first synchronous world growth in decades coupled with easy monetary policies in most of the developed world.

“We believe the unusually favorable goldilocks combination of accelerating growth and tepid inflation experienced in 2017 will not repeat,” Mitchell added.

“Instead, normalization of interest rate policy will likely upset the rhythm with more volatile and less forgiving markets.”

Indeed, the MSCI Asia ex-Japan index is almost flat so far in 2018 compared with a more than 13% jump in the same period last year.

E- Mini futures for the S& P 500 edged up 0.20%, after Wall Street was barely changed on Friday following a turbulent week.

Investors will turn their focus to a torrent of data from the US this week including consumer spending later in the day, the Fed’s policy decision on Wednesday, and a jobs report on Friday.

Political tensions in the Korean Peninsula are also showing signs of easing, following a historic summit between North Korean leader Kim Jong Un and South Korea’s Moon Jae- in last week at which they vowed “complete denuclearization.” —