With little North Korea news over the weekend, investors piled into risk assets to start the week; Asia-Pacific equity markets and the U.S. dollar gained.
Havens like gold, U.S. Treasurys and the Japanese yen were lower. North Korea had been expected to conduct a weapons test on Saturday, in observance of the anniversary of the founding of the nation. A year earlier, Pyongyang conducted a nuclear test to mark the occasion.
“A generally positive start is expected for Asian markets as risk sentiment recedes from both North Korea and Hurricane Irma’s end,” said Jingyi Pan, a market strategist at IG Group.
The Nikkei Stock Average NIK, +1.38% gained 1.4% in early trade after setting fresh four-month lows on Friday and logging its worst week in seven months, thanks in part to a weaker yen. That helped to boost the attractiveness of the country’s export-oriented stocks.
Among those, several automakers, including Toyota Motor 7203, +1.30% and Mitsubishi Motors 7211, +1.51% , were all up more than 1%, while electronics giants Sony 6758, +3.68% and Sharp 6753, +2.50% added 3.2% and 2.2%, respectively.
Elsewhere, South Korea’s Kospi SEU, +0.85% was up 1%, driven by a 2.2% jump for Samsung Electronics 005930, +1.92% , while Hong Kong’s Hang Seng Index HSI, +0.97% added 0.9% and Australia’s S&P/200 XJO, +0.75% rose 0.7%.
Broadly speaking, financial stocks led gains in key regional markets, recovering from declines at the end of last week. Japan’s Topix bank subindex rose 1.7%, while Australia’s big four banks were up about 1.4% on average. HSBC Holdings 0005, +1.34% was up 1.2% in Hong Kong.
Meanwhile, the WSJ Dollar Index was up 0.6% against a basket of currencies, after sinking to its lowest level in more than two years on Friday. In particular, the dollar was up 0.5% against the Japanese yen.
Monday’s dollar rise was a “relief rally…after last week’s battering,” Commerzbank analysts said.
Despite the dollar’s strength, the Korean won managed to make gains, thanks to the buoyant local equity market. The dollar was down 0.3% against the won at 1126.77, though Samsung Futures forex analyst SeungJi Jeon said he sees support at 1,125 levels due to lingering North Korea risks.
In commodities, oil prices rebounded slightly. Nymex oil futures LCOX7, +0.43% were up 0.7% at $47.81 a barrel.