Optimism over China's economic plans helped the ASX start the trading week with modest gains as buyers bet on demand for Australian raw materials.
At 1pm EST the ASX 200 was nine points or 0.2% higher at 5739 after shaking off early weakness triggered in part by news of a North Korean missile launch. The index slipped as low as 5715 before reversing losses. The metals & mining sector led the rebound, rising 1.6% after China's leadership committed to economic growth of around 6.5%. The materials sector gained 1.2%, telecoms 0.9% and financials 0.2%.
Asian markets were unsettled by reports that North Korea fired four ballistic missiles, three landing in Japanese waters. China's Shanghai Composite %, Hong Kong's Hang Seng % and Japan's Nikkei %. Dow futures were recently points or 0.1%.
“Investors seem to be reacting to the North Korean missile launch,” Hiroaki Hiwada, strategist at Toyo Securities in Japan, told Bloomberg. “The yen’s strengthening, and investors are staying away from trades as geopolitical risk increases. I do think this is a temporary situation as we’ve seen in the past, but with this many missiles being launched there’s heightened tension.”
Gold futures caught an uplift from the increase in geopolitical tensions, rising $7 or 0.38% this morning to US$1,233.40 an ounce. Crude oil futures retreated 20 cents or 0.38% to US$53.13 a barrel. The dollar was buying 75.74 US cents.
Market is caught between competing tensions, but sensibly concluding that Chinese demand for natural resources is likely to be more important in the long term than another bout of North Korean sabre-rattling. Trading: had an ill-considered dabble in ZYB for brokerage, then switched to RIR for any partial recovery from the pre-CR sell-off.
