Asian Shares Broadly Higher Following Recent Pullback

By Kenan Machado Features Dow Jones Newswires

Global equity markets broadly recovered from last week's pullback, as robust corporate earnings and reduced fears of imminent military conflict between the U.S. and North Korea lifted buying interest.

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Hong Kong's Hang Seng Index rose 1.2% in Monday's morning session, after registering its biggest one-week decline since December. Australia's S&P/ASX 200 added 0.6% and Singapore's Straits Times Index rose 0.7%, with buying across sectors.

In China, strong demand for midcap stocks helped drive the Shenzhen Composite Index up 1.7% in the morning session, while the startup ChiNext board jumped 2.6%, both outperforming the Shanghai main board's 0.4% rise.

"Actual earnings results are still surpassing more optimistic forecasts" in Asia, said Stephen Corry, chief investment strategist at asset manager LGT in Hong Kong, noting that in Asia excluding Japan, roughly half the companies have reported earnings.

He said the market pullback last week was "therefore an opportunity to buy risk assets."

Among the top gainers on Monday, shares of telecom giant China Unicom traded in Hong Kong surged 5.6% at the midday break, after the company late Friday said it expects to report a 69% jump in first-half net profit, thanks to strong demand for high-speed telecommunication services.

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More broadly in the region, investors moved away a little from haven assets. The yen gave up some of its recent gains, with the U.S. dollar last buying Yen109.61, compared with a low of Yen108.75 on Friday. A stronger yen hurts the competitiveness of Japanese exports.

The greenback's recovery helped the benchmark Nikkei Stock Average pare early losses to trade 0.8% lower. It had declined as much as 1.2% in early trade as traders caught up after a holiday on Friday.

Also supporting equities trading were weak inflation readings in the U.S. on Friday, prompting markets to lower the probability of the Federal Reserve raising rates in December, making risk assets in Asia more attractive.

Meanwhile, markets took positively the reduced possibility of military conflict in the Korean Peninsula, said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. "Some of the rhetoric has been scaled back."

Late Sunday, U.S. Secretary of Defense Jim Mattis and Secretary of State Rex Tillerson wrote that the Trump administration was continuing to seek diplomatic solutions to seek the "irreversible denuclearization" of North Korea.

"The U.S. has no interest in regime change or accelerated reunification of Korea," the two wrote in a commentary published in The Wall Street Journal. The U.S. also has no desire to station troops north of the Demilitarized Zone, they added.

Those words followed comments on Sunday by Gen. Joe Dunford, chairman of the Joint Chiefs of Staff, that the U.S. military would support Mr. Tillerson's effort to use diplomatic and economic pressure on North Korea to avoid war.

In South Korea, the Kospi rebounded 0.7%, after correcting 3.2% last week, the largest one-week percentage decline since June last year. Samsung Electronics rose 0.9% and Korean Air added 0.4%.

Among sectors that outperformed, Chinese car makers listed in Hong Kong got a boost on solid sales in the world's largest car market. Geely Automobile surged 4.1% and Brilliance China was up 2.7%.

Joanne Chiu contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

August 14, 2017 01:21 ET (05:21 GMT)