- Stocks Bounce and Havens Drop as Korea Fears Abate
The risk-off mood that gripped markets last week showed signs of easing, with shares in Europe following Asian equities higher and American stock futures advancing as the prospect of a war between the U.S. and North Korea receded. Havens including gold, Treasuries and the yen fell.
The Stoxx Europe 600 Index headed for its first gain in four days, tracking increases across markets including South Korea, Australia and Hong Kong after U.S. officials moved to tamp down fears of imminent war with North Korea. Japanese equities bucked the trend as traders returned after a holiday. Core European government bonds followed Treasuries lower. Bitcoin posted yet another surge.
Volatility gauges jumped last week and risk assets tumbled as the sudden increase in tension around the Korean peninsula jolted markets globally. The reaction was exacerbated by the rich valuations on display across multiple assets, many of which had barely corrected this year.
Meanwhile, there was a mixed bag of data out of Asia on Monday. Japan’s second-quarter growth topped estimates, reflecting better domestic demand. China’s economy posted its worst showing this year as curbs on property, excess borrowing and industrial overcapacity began to have an impact.
Stocks
- The Stoxx Europe 600 Index increased 0.8 percent as of 9:33 a.m. in London, the largest climb in more than a week on a closing basis.
- The MSCI All-Country World Index gained 0.2 percent, the first advance in a week.
- The U.K.’s FTSE 100 Index jumped 0.5 percent, the largest climb in more than a week.
- Germany’s DAX Index increased 1 percent, the biggest climb in more than a week.
- Futures on the S&P 500 Index jumped 0.6 percent, the largest climb in more than a month.
Currencies
- The euro declined 0.2 percent to $1.1799.
- The Bloomberg Dollar Spot Index increased 0.3 percent, the largest climb in more than a week.
- The British pound fell 0.2 percent to $1.2984.
Bonds
- The yield on 10-year Treasuries gained three basis points to 2.22 percent.
- Germany’s 10-year yield climbed five basis points to 0.43 percent.
- Britain’s 10-year yield rose three basis points to 1.084 percent.
Commodities
- Gold dipped 0.6 percent to $1,281.83 an ounce, the first retreat in a week.
- West Texas Intermediate crude declined 0.5 percent to $48.59 a barrel, the lowest in almost three weeks.
Asia
- Japan’s Topix index finished 1.1 percent lower. South Korea’s Kospi index advanced 0.6 percent. Australia’s S&P/ASX 200 Index rose 0.7 percent. In Hong Kong, the Hang Seng Index gained 1.4 percent, while the Shanghai Composite Index rose 0.9 percent.
- The Japanese yen dipped 0.5 percent to 109.77 per dollar, the first retreat in a week.
