Asia shares waver as US warns North Korea
Shares in Asia were mixed yesterday after US Vice President Mike Pence, on a visit to South Korea, warned that US patience with Pyongyang has run out. Many global markets were closed for Easter holidays.
Markets were closed in France, Germany and Britain. US shares were set to drift lower, with Dow futures slipping nearly 0.1 percent at 20,401. S&P 500 futures were also down 0.1 percent at 2,325.60. The region remains jittery over North Korea’s nuclear weapons program and a failed missile launch over the weekend. During a visit to a military base near the Demilitarized Zone separating the Koreas yesterday, US Vice President Mike Pence warned that “the era of strategic impatience is over.” He said the US and its allies would deal with the situation “through peaceable means or ultimately by whatever means are necessary.”
Upbeat China
China’s economy expanded at a faster-thanexpected 6.9 percent in January-March, up from 6.8 percent in the previous quarter. China’s economy has been gaining momentum after last year’s economic growth was the slowest in nearly three decades. The upbeat data led shares in Shanghai and Shenzhen to fall in anticipation the government will be tightening credit to avoid overheating in the property market. “The upshot is that China’s economy continued to experience strong growth in the last quarter and the upbeat data for March suggests that some of this strength will likely extend into Q2,” Julian Evans-Pritchard of Capital Economics wrote in a commentary. “Nonetheless, with the acceleration in credit growth that helped drive the recent recovery now being reversed, we still expect the economy to begin slowing before long.”
Tokyo’s Nikkei 225 gained 0.1 percent to finish at 18,355.26. Markets in Australia and Hong Kong were closed for Easter. South Korea’s Kospi added 0.5 percent to 2,145.76. The Shanghai Composite index slipped 0.7 percent to 3,222.17 and markets in Southeast Asia were mostly lower. Asian markets moved cautiously even as Chinese economic growth data beat expectations, with geopolitical concerns weighing on sentiment. China’s economy grew 6.9 percent in the first quarter of 2017, government data showed, marking the second quarterly improvement since the final three months of 2014. The reading was better than the median analyst expectation of 6.8 percent in an AFP poll, and up on the fourth quarter figure. But tensions on the Korean peninsula continued to affect markets yesterday as US Vice President Mike Pence warned North Korea not to test President Trump’s resolve during a visit to the heavily militarized border between the two Koreas.
Relations between Pyongyang and Washington have reached new lows in recent weeks as a series of North Korean weapons tests have prompted warnings from Trump’s administration. Trump last week ordered a naval strike group led by the USS Carl Vinson aircraft carrier to the region, though the vessels remain a long way from the peninsula.
Shanghai fell 0.7 percent, Singapore dropped 0.8 percent while Manila and Jakarta were also down. “China’s financial regulation coupled with geopolitical risks surrounding North Korea have heightened risk aversion and put pressure on stocks,” Ken Chen, an analyst at KGI Securities Co in Shanghai, told Bloomberg News.
But he added that “the downside should be limited as first-quarter figures showed economic fundamentals remained sound.” Yesterday’s figures also showed China’s industrial output growth rose to 7.6 percent year-on-year in March, beating a Bloomberg estimate of 6.3. The readings follow data showing robust foreign trade and a further expansion in factory activity driven by a pickup in production and demand last month. —Agencies