BackAsia stocks surge after Wall St takes Paris attacks in stride
Asia stocks relieved after seeing Wall Street rally overnight; crude oil edges up, gold steady after paring earlier gains
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Tokyo: Asian stocks rose across the board on Tuesday, relieved after seeing Wall Street take the Paris attacks in stride and surging overnight, while expectations for a December rate hike by the Federal Reserve kept the dollar on a bullish footing.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6%, bouncing from a 6-week low struck the previous day on risk aversion triggered by the assault on the French capital.
South Korea’s Kospi was up 1.3%, Australian shares gained 1.4% and Shanghai shares climbed 1.7%. Japan’s Nikkei added 1.6%.
“Investors think that the attacks in Paris would have little impact on the global economy in the long-term," said Hikaru Sato, senior technical analyst at Daiwa Securities in Tokyo.
“Depending on new developments, the market could get affected in the future, but right now, market consensus is that the attacks have a limited impact on the stock market."
Asia took early leads from Wall Street, which surged on Monday as investors decided Friday’s attacks in Paris would have little long-term impact on the US economy and corporate earnings. The Dow rose 1.4% and the S&P 500 surged 1.5%.
European equities had also held firm on Monday, with the pan-European FTSEurofirst 300 index edging up 0.16% and France’s CAC dipping only 0.12%.
“In light of all the tragedy in France, it is refreshing to see that the terrorists did not successfully terrorize the financial markets...and even though investors sold the EUR/USD, the decline could have been a lot steeper.
“In fact we did not see any unusually large moves in currencies," wrote Kathy Lien, managing director of FX Strategy for BK Asset Management.
The dollar rose to a 1-week high of ¥123.40, a safe-haven currency usually sought in times of geopolitical tension. The greenback also rose to an 8-month high against the Swiss franc, another haven.
The euro dipped to $1.0659, a 7-month trough.
Crude extended gains after the Paris attacks raised geopolitical tensions that were seen to threaten global oil supply.
US crude was up 0.2% at $41.80 a barrel after surging 2.4% on Monday. Brent crude nudged up 0.2% to $44.66 a barrel, adding to overnight gains of 2.2%.
Spot gold was little changed at $1,083 an ounce. The precious metal pared gains overnight as an initial flow of flight-to-safety buying after the Paris attacks petered out.
Investor focus has returned to a potential rate hike by the Fed in December. Higher interest rates would diminish the allure of the non-interest-paying gold. Reuters
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