Asia markets begin week with gains

Asian markets kicked off the week with gains yesterday as concerns over North Korea eased and a killer hurricane struck Florida with less force than feared.Traders breathed a sigh of relief that Pyongyang did not fire another missile on Saturday, choosing instead to mark its foundation day with a parade.The news provided some much-needed cheer for markets after last week’s sell-off sparked by Kim Jong-Un’s nuclear test, with safe-haven assets such as the yen and gold retreating yesterday and the dollar picking up.The focus is now on the UN Security Council where Washington is pushing for a vote Monday on tough fresh sanctions against Pyongyang, despite resistance from China and Russia.The greenback had come in for a pounding in recent weeks on waning expectations for further Federal Reserve interest rate rises and doubts about Donald Trump’s chances of pushing through his market-friendly economic policies.However, it bounced back yesterday, surging back above ¥108 from Friday’s 10-month lows, while it also clawed back against the euro.“The dollar is on a slightly better footing in early trade as the North Korea headline risk has cooled a bit from last week’s fever pitch,” said Stephen Innes, head of Asia-Pacific trading at OANDA.“With little geopolitical headline escalation over the weekend, traders are nimbly unwinding some NK over-hedges in early trade but are still on headline watch.” On equity markets the weaker yen helped Japan’s Nikkei end the day 1.4% higher, while Hong Kong jumped 1% and Shanghai closed up 0.3%. Sydney piled on 0.7%, with Seoul 0.7% higher and Singapore 0.1% up.There were also gains for Bangkok and Manila.“Investors who had sold equities on wariness over a possible missile launch from North Korea are unwinding their positions for now,” Hiroyasu Iida, head of the investment research centre at Aizawa Securities, told Bloomberg News.Traders are still keeping an eye on Hurricane Irma, which is battering Florida but with relatively weaker winds than those which flattened parts of the Caribbean.Millions have been left without power and many have fled the south of the state, while US forecaster AccuWeather said Sunday the economic cost of Irma and Harvey, which hammered Texas and Louisiana last month, could hit $290bn.Analysts said the recovery could cause another headache for the Fed as its policymakers decide whether to raise borrowing costs for a third time this year.Greg McKenna, chief market strategist at AxiTrader, pointed out that New York Fed chief Bill Dudley had said it was too early to know when the bank would tighten rates again.“His comments on the two hurricanes complicating the outlook for rates was an important departure from what’s been his usually hawkish bent,” McKenna said. “It’s another indication that things have become a little more complicated for the Fed as it seeks to normalise rates.”On oil markets, prices picked up after taking a beating Friday on concerns that demand in Florida, one of the biggest crude consumers in the US, would be hit. West Texas Intermediate sank 3.3% on Friday while Brent slid 1.3%.In Tokyo, the Nikkei 225 closed up 1.4% at 19,545.77 points; Hong Kong — Hang Seng rose 1.0% at 27,955.13 points and Shanghai — Composite ended up 0.3% at 3,376.42 points yesterday.