TOKYO, Aug 10 — Asian stocks steadied and US Treasury bond prices fell slightly this morning as the risk aversion triggered by the latest flare up of tensions between the United States and North Korea began to settle.
MSCI’s broadest index of Asia-Pacific shares outside Japan stood little changed after dropping 0.6 per cent the previous day.
Japan’s Nikkei rose 0.2 per cent and Australian shares gained 0.1 per cent. South Korea’s KOSPI was little changed.
Asian stocks were supported after seeing Wall Street shares closed barely lower overnight, trimming losses, as investors appeared to brush off geopolitical concerns.
The flight-to-safety into US Treasuries also abated overnight.
The 10-year Treasury note yield initially fell to a six-week low of 2.212 per cent as bond prices rose, but pulled back to 2.251 per cent.
“US equities managed to cut its losses towards yesterday’s close and while the VIX (volatility index) did pop higher, it still remains at an overall low level. Furthermore, the benchmark Treasury yield also climbed away from lows,” said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.
“These developments suggest that risk aversion caused by geopolitical tensions in North Asia are temporary in nature, as long as it does not involve military conflict.”
Bids into the Japanese yen and Swiss franc, currencies that find demand in times of geopolitical anxiety, also tapered.
The dollar was steady at 110.030 yen after going as low as 109.560 overnight, its weakest in eight weeks.
The Swiss currency was little changed against the dollar at 0.9637 franc after surging more than 1 per cent the previous day.
The euro was flat at US$1.1759 (RM5.04) while the dollar index against a basket of major currencies stood steady at 93.534 after dipping 0.1 per cent the previous day.
Currency markets focused on the US producer price index data due later in the session. Investors will study the numbers to get a feel for the US inflation trend and any impact they data could have on the Federal Reserve’s monetary policy.
The New Zealand dollar was 0.2 per cent higher at US$0.7354. The kiwi bounced from near one-month low of US$0.7309 struck overnight as the Reserve Bank of New Zealand took a less dovish tone than some had feared.
The RBNZ held rates at a record low of 1.75 per cent today and reiterated that policy would stay loose for a considerable time to come.
In commodities, crude oil stretched gains after rising overnight on data pointing to declining US inventories.
Brent crude added 0.15 per cent to US$52.78 a barrel, inching towards a two-month peak of US$52.93 set at the start of the month.
Gold prices were nudged away from recent highs as broader risk aversion receded somewhat.
Spot gold was 0.1 per cent lower at US$1,275.56 an ounce after having spiked the previous day to a near two-month peak of US$1,278.66. — Reuters
