Asia Extends Global Equity Rally as Bonds Slide: Markets Wrap

(Bloomberg) -- Asian equities took another leg higher after the S&P 500 Index rose to a record high and Treasuries tumbled, with less damage than originally feared from Hurricane Irma supporting the case for a gradually improving U.S. economy.

Japan’s Topix index added to Monday’s rally, the biggest in three months, while South Korean and Australia equities climbed. The S&P 500 jumped the most since April to close at its first record in a month. Bloomberg’s dollar index steadied after recouping some of last week’s slump on Monday. Oil also held gains triggered by signs that predictions about Irma’s wrath were overdone.

Moves in favor of risk assets that began Monday were built on throughout the day and into Asian trading on Tuesday morning, supported also by a lack of further provocative developments from North Korea. The UN Security Council on Monday approved a watered-down proposal to punish the nation for its latest missile and nuclear tests, omitting an oil embargo and a freeze of Kim Jong Un’s assets.

“What road seems to be traveled now is one of negotiation rather than provocation. There has been a reversal of the tactics over the last week and I think that’s what the markets are seeing,” Jefferies Chief Global Strategist Sean Darby told Bloomberg Television, referring to the UN vote. “The irony at the moment is that for risk-takers the environment is very good. The inflation data is nowhere near as strong to force the hand of the central banks and economic data is actually getting better.”

Markets in the Philippines are shut as heavy rain and flooding from tropical depression Maring descends on the country.

Terminal subscribers can read more on our Markets Live blog.

Among the key events this week for markets:

• Apple Inc. reveals its newest products on Tuesday, set to include new iPhones and a fresh version of the Apple watch.
• U.S. retail sales and inflation data are due this week.
• The Bank of England will almost certainly leave policy unchanged Thursday, even though the U.K. inflation reading two days earlier may show a pickup.
• Also due this week are data on China’s August industrial production, retail sales and fixed-asset investment.
• Australia releases jobs data on Thursday.
• India inflation and industrial output releases are due Tuesday.

Here are the main moves in markets:

Stocks

• Japan’s Topix index advanced 0.9 percent as of 10:50 a.m. in Tokyo. 
• Australia’s S&P/ASX 200 Index added 0.6 percent. 
• South Korea’s Kospi index advanced 0.2 percent.
• The Hang Seng Index in Hong Kong and gauges in China fluctuated.
• Futures on the S&P 500 Index were flat after the underlying gauge added 1.1 percent on Monday.

Currencies

• The Bloomberg Dollar Spot Index was flat Tuesday after gaining 0.6 percent for the first advance in more than a week on Monday.
• The yen was at 109.40 per dollar after sinking 1.4 percent on Monday, its steepest decline since January.
• The Aussie bought 80 U.S. cents.
• The euro was steady at $1.1952.

Bonds

• The yield on 10-year Treasuries held at 2.13 percent after rising eight basis points on Monday.
• The yield on Australian government notes with a similar maturity added about three basis points to 2.63 percent.

Commodities

• Gold was steady at $1,325.60 an ounce after sinking 1.4 percent on Monday.
• West Texas Intermediate crude was little changed at $48.06 following a 1.2 percent gain on Monday.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net, Andreea Papuc in Sydney at apapuc1@bloomberg.net.

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Colin Simpson