Asian as well as European traders returned to buying Wednesday, reversing the previous day’s losses as Donald Trump’s measured response to North Korea’s missile launch and upbeat US data restored a semblance of calm to markets.
The rush to the sidelines that followed Pyongyang’s launch of a rocket over Japan Tuesday abated through the day as initial fears subsided, while the dollar clawed back losses against the yen and euro, news outlets reported.
Asian markets finished mostly higher. Japan’s Nikkei 225 rose 0.7% to 19,506.54 and South Korea’s Kospi was up 0.3% to 2,372.29. Hong Kong’s Hang Seng jumped 1.2% to 28,094.61 while Shanghai Composite Index edged down 0.1% to 3,363.63. Australia’s S&P/ASX 200 was flat at 5,669.70. Stocks were higher in Taiwan and Singapore but lower in Indonesia.
The recovery in stock markets, as well as the modest fall in the value of gold, suggests that investor fears over the developments in North Korea have abated somewhat. The country’s leader, Kim Jong Un, has called for more weapons launches targeting the Pacific Ocean to advance his country’s ability to contain Guam.
US President Donald Trump said North Korea had signaled its “contempt for its neighbors” and that “all options are on the table” in terms of a US response. The UN Security Council strongly condemned the launch, AP reported.
In Europe, the FTSE 100 index of leading British shares was up 0.4% at 7,365 while Germany’s DAX rose 0.5% to 12,000. France’s CAC 40 was 0.5% higher at 11,999. US stocks were poised for a steady opening after turning around Tuesday, with Dow futures and the broader S&P 500 futures up 0.1%.
The pan-European STOXX 600 gained 0.5%, recovering nearly all the ground lost in the previous session when North Korea’s missile launch sparked a sell-off. Eurozone stocks and blue-chips rose in line.
Banking stocks, which had led the risk-averse move lower on Tuesday, were the strongest performers, up 0.9%, helping Italy’s bank-heavy index outperform.
Fears of a more drawn-out correction dissipated, with Credit Suisse strategists saying: “Market jitters such as these are unlikely to turn into a longer-term period of outright risk-off sentiment.”
Benchmark US crude dropped 31 cents to $46.13 per barrel in New York while Brent crude, the international standard, fell 24 cents to $51.42 per barrel in London.
The euro, which on Tuesday breached the $1.20 mark for the first time since January 2015, fell 0.3% to $1.193. The dollar rose 0.2% to 109.93 yen.
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