ASIA MARKETS: Asian Markets Return To Gains After Korean Election

By Ese ErherieneFeaturesDow Jones Newswires

Nikkei ekes up, Hang Seng hits 21-month high

Equity markets in Asia were broadly higher early Wednesday, with local drivers outpacing global geopolitical concerns.

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Markets have thus far had a muted reaction to the unexpected firing of James Comey, the director of the Federal Bureau of Investigation.

South Korea's Kospi index was recently up 0.2%, as Moon Jae-in's victory in the country's presidential election Tuesday removed a major overhang from the market. However, the restrained gains suggest investor caution about ties between South Korea and the U.S.

Some analysts expect that a more difficult relationship between the two countries will materialize, which could further complicate U.S. efforts to isolate Pyongyang and curb its nuclear-weapons program.

"[Moon] has advocated a softer approach to North Korea, which could pit him against Trump," ANZ said.

Meanwhile, the Korean won was up 0.5% against the U.S. dollar following the election results, though further gains are likely limited.

"The market is probably happy with a clear victory but they also have to contend with the announcement from North Korea to prepare for a nuclear test," said Sean Callow, a senior forex strategist at Westpac in Sydney. "That probably limits the upside to the election."

Elsewhere, Japan's Nikkei Stock Average was recently up 0.4%, while Australia's S&P/ASX 200 reversed early losses to trade 0.3% higher. Hong Kong's Hang Seng Index was 0.7% higher, reaching a 21-month high.

Markets were closed in Singapore, Malaysia and Thailand for public holidays.

Stocks in Japan were slightly higher amid largely solid earnings results, as fears about the eurozone continued to recede. Still, profit-taking pressure was also weighing on the Nikkei as the index approached a key 20,000-point level.

Among individual companies, Mitsubishi Motors (7211.TO) surged to its best level in 12 months after projecting a profit for the new fiscal year, as the auto maker looks to leave behind a fuel-economy scandal that contributed to a 199 billion yen ($1.75 billion) annual loss.

Still, estimates for this year's top and bottom lines are still lower than what was reported two years ago. Shares were last up 8.2%.

In Australia, markets rebounded from concerns about potential bank levies that saw shares in the financial subindex decline sharply in the previous session.

"The levy should shave 4% to 5% off earnings for the banks," said Chris Weston, chief market strategist at brokerage IG. "So everyone is looking out for announcements on whether we see a repricing of lending rates to offset the hit to margins.

But bank stocks continued to face selling pressure, with Westpac Banking (WBK) falling 0.6% and Commonwealth Bank of Australia (CBA.AU) declining 0.5%.

Haven assets saw a bit of buying in Asian trade after the announcement about Comey, with both the yen and London spot gold adding 0.2%.

(END) Dow Jones Newswires

May 09, 2017 23:01 ET (03:01 GMT)