By Ese Erheriene
Stocks continued to stabilize Wednesday, with Asia-Pacific markets building on Tuesday afternoon’s rebounds that followed a selloff on fears around North Korea’s latest missile launch.
Investors’ resurgent appetite for riskier assets came despite U.S. President Donald Trump’s stern response to the launch. Major U.S. stock indexes rose slightly on Tuesday, but some larger gains have been logged in Asia.
Trump’s insistence that “all options are on the table” as far as North Korea is concerned “should have escalated the risk-off” sentiment seen Tuesday, said Bart Wakabayashi, Tokyo branch manager at State Street.
Instead, investors seemed to shrug off the geopolitical tension—as has repeatedly been the case this year after quick bouts of worry.
But South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.49% was struggling to stay higher day over day Wednesday. That market has stalled this month as tensions between North Korea and the U.S. have risen. The pause has also come as the index through July rose a record eight straight months; it entered Wednesday down 1.6% for August.
The month’s weakness suggests “lackluster market appetite given the intensified geopolitical tensions,” OCBC Bank said. The Kospi on Tuesday finished down just 0.2% after falling as much as 1.6% during the session.
One market that didn’t rebound yesterday, New Zealand, was the best performer Wednesday, up 0.7% along with Hong Kong’s Hang Seng /zigman2/quotes/210598030/delayed HK:HSI -1.09% . Not far behind were Japanese equities, aided by a nearly 1% gain in the U.S. dollar versus the yen since the end of stock trading Tuesday. The dollar moved back above ¥109.75 after bottoming out yesterday at around ¥108.33, not far from 2017’s low.
The Nikkei /zigman2/quotes/210597971/delayed JP:NIK -0.39% was recently up 0.8%, helped by exporters. Auto makers Mitsubishi Motors /zigman2/quotes/202404490/delayed JP:7211 -0.25% and Mazda /zigman2/quotes/204777714/delayed JP:7261 -0.11% each gained about 1% while electronics giant Sony /zigman2/quotes/201361720/delayed JP:6758 -0.57% climbed 2.6%.
While Hong Kong’s Hang Seng /zigman2/quotes/210598030/delayed HK:HSI -1.09% climbed 0.8% and Taiwan’s Taiex rose 0.6%, gains were more muted elsewhere, with New Zealand’s benchmark /zigman2/quotes/211587880/delayed NZ:NZ50GR +0.07% up 0.5% after dropping 1.1% Tuesday.
Australian equities were soft along with Korean stocks Wednesday, reversing early gains as the Aussie dollar hit session highs following strong construction data. The reading is a good signal on how next week’s second-quarter GDP report will fare. Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.33% was recently up 0.1%.
But the broader Asian stock-market rebound was also helped by U.S. economic data showing that growth remains steady and consumer sentiment is upbeat, said Masashi Murata, currency strategist at Brown Brothers Harriman.
“The fundamentals remain unchanged, so the bounce back has been easier,” he added.
The dollar also rebounded overnight but was down slightly by midday Wednesday in Asia, according to the WSJ Dollar Index /zigman2/quotes/210673925/realtime XX:BUXX -0.39% . The muted greenback also allowed gold to remain just off the 11-month highs set overnight and above the psychologically key level of $1,300 a troy ounce.
Meanwhile, Brent oil futures were down 0.4% as Tropical Storm Harvey continued to hamper refinery operations in Texas.