Global Stocks Rise as North Korea Backs Off -- 2nd Update

Global stocks rise as North Korea pulls back threats

-- Nikkei leads gains in Asia

-- Wall Street futures point to opening gains

Global equities continued to rebound from their late-week slide Tuesday as tensions eased between the U.S. and North Korea.

The Stoxx Europe 600 was up 0.1% in Tuesday morning trade, while futures signaled the S&P 500 was poised to rise 0.2%.

Following days of escalating diplomatic rhetoric between Donald Trump and Kim Jong Un, state television reported the North Korean leader had opted not to use aggression against the U.S. territory of Guam.

The rebound started Monday in Asia before carrying through to Europe and the Americas. That included the S&P 500 logging its best one-day gain since April at 1%.

Markets will shrug off events such as the North Korea tensions so long as interest rates continue to stay low, the labor market stays strong and the global economy stays healthy, said Dan Miller, director of equities at GW&K Investment Management.

"The stock market should continue on its merry way. Things like North Korea or events in Virginia over the weekend, the market tends to look past those events," he said.

The Federal Reserve will release minutes from its last meeting Wednesday, giving investors clues on the central bank's plans for interest rates during a time when inflation has stayed low, and on its planned balance sheet unwinding.

Federal Reserve Bank of New York President William Dudley said late Monday he expects another interest rate increase this year.

Federal-funds futures, used by investors to bet on the U.S. interest-rate outlook, showed roughly a 47% chance that the Fed would raise rates by the end of the year, according to CME Group data.

South Korean markets closed for Independence Day and Japan led the way higher in Asia on Tuesday. The Nikkei added 1.1%, following a 1% drop Monday. Japanese markets were closed on Friday for a national holiday.

The dollar was recently 0.7% higher against the yen.

The WSJ Dollar Index, which measures the greenback against a basket of currencies was up 0.2%.

Monday's other regional laggard, Taiwan, was also outperforming on Tuesday. The Taiex followed a 1% decline with a 0.8% advance amid a rebound in big tech stocks. The Australian benchmark was up 0.5%.

Improved risk appetite added to downward pressure on gold. The metal, considered a safe store of value in times of uncertainty, was down 0.8%.

The 10-year U.S. Treasury yield rose to 2.245% Tuesday from 2.217% Monday.

Suryatapa Bhattacharya contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com

(END) Dow Jones Newswires

August 15, 2017 05:41 ET (09:41 GMT)