HONG KONG: Most Asian markets started the week on a positive note Monday, with Shanghai returning from a week-long break with healthy gains as traders looked past a surprise drop in US jobs.
But geopolitical tensions returned with another feared North Korea long-range missile test reportedly in the planning and US President Donald Trump suggesting that talking to Kim Jong-Un’s regime was a waste of time and “only one thing will work”.
The Turkish lira was sitting close to record lows against the dollar as Ankara and Washington each cancelled visa services for the other in a deepening diplomatic row.
Wall Street provided a meek lead for Asia, with the Dow and S&P 500 retreating from record highs in response to figures on Friday showing the US lost 33,000 posts in September — the first drop since 2010.
However, while the fall compared with a forecast gain of 75,000, analysts pointed to improving wage growth and a further dip in the overall unemployment rate. They added that the figure was likely an aberration owing to one-off events in the hurricanes that hit Florida and Texas.
Shanghai ended 0.8 percent higher as investors returned from the week-long Golden Week celebrations and reacted for the first time to the Chinese central bank’s decision to cut the amount of cash banks must hold in reserve as part of a push to help small businesses.
Sydney rose 0.5 percent, Wellington was up 0.4 percent and Singapore gained 0.1 percent while Manila put on 0.2 percent. However, Hong Kong retreated 0.5 percent on profit-taking after ending Friday at a 10-year high.
Tokyo, Seoul and Taipei were closed for public holidays.
In early European trade London dipped 0.1 percent but Paris gained 0.1 percent and Frankfurt put on 0.2 percent.
North Korea fears
Eyes are now turning back to the US-North Korea standoff after a Russian lawmaker said Pyongyang was planning to fire another missile, which could hit the US west coast.
“There was news over the weekend that ‘the little rocket man’ in North Korea is now capable of launching a missile that can hit the US mainland,” Shane Channel, equity and derivatives adviser at ASR Wealth Advisers, said in a commentary referring to Trump’s name for Kim.
That, added to Trump’s remark, led to a return to safe-haven assets with gold up more than one percent at $1,285 on Monday.
The dollar held up against its major peers as markets continue to bet on a third interest rate hike this year, likely in December.
The pound faced fresh pressure with uncertainty surrounding Prime Minister Theresa May’s future while the euro continues to struggle with the fallout from Catalonia’s unofficial vote in favour of independence from Spain, fuelling fears about one of the eurozone’s biggest economies.
The greenback also soared more than six percent to 3.8533 lira at one point before easing slightly as Ankara and Washington traded barbs over the arrest of a local staffer at the US embassy in Turkey.
“This latest escalation adds more fuel to the fire after tension was nearing a boil… over US support for Syrian Kurdish militants in the war against ISIS,” said Stephen Innes, head of Asia-Pacific trading at OANDA. Turkey views the Kurdish militants as a terrorist group.