Global Shares Advance Following Recent Pullback

By Justin Yang and Kenan Machado Features Dow Jones Newswires

Global equity markets moved higher

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-- Strong corporate earnings in Asia

-- Haven assets edge down

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

The Stoxx Europe 600 moved 0.7% higher shortly after opening Monday, while futures pointed toward increases on Wall Street.

Also supporting equities were weak inflation readings in the U.S. on Friday, prompting markets to lower the probability of the Federal Reserve raising rates in December.

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Federal-funds futures, used by investors to place bets on the Fed's rate-policy outlook, on Monday showed a roughly 37% chance of a rate increase by the end of the year, down from 48.3% a month ago, according to CME Group data.

In Asia, Hong Kong's Hang Seng Index rose 1.3% Monday, after registering its biggest one-week decline since December. In China, the Shanghai Composite rose 0.9%. Australia's S&P/ASX 200 added 0.7% and Singapore's Straits Times Index rose 0.6%, with buying across sectors.

"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 6.2%, 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.

More broadly in the region, investors moved away from haven assets. Gold was down 0.2% to $1291.80 a troy ounce. The yen fell 0.3% against the dollar. A stronger yen hurts the competitiveness of Japanese exports. The WSJ Dollar Index, which measures the dollar against a basket of currencies, rose 0.1%.

Japan reported its economy grew at a faster-than-expected pace of 4% in the April-June period Monday on strong household spending. The benchmark Nikkei Stock Average was down 1%.

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.

In South Korea, the Kospi rebounded 0.6%, after it fell 3.2% last week, the largest one-week percentage decline since June last year. Samsung Electronics rose 0.9% and Korean Air added 0.7%.

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 4.5% and Brilliance China was up 3.9%.

Joanne Chiu contributed to this article.

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

(END) Dow Jones Newswires

August 14, 2017 04:27 ET (08:27 GMT)