Japan stocks rise and Kospi swings; Yen gain fades

A signboard showing the Korea Composite Stock Price Index (Kospi) in Seoul, South Korea. PHOTO: EPA

SYDNEY (BLOOMBERG) - Stocks in Japan climbed on optimism healthy corporate earnings can spur further gains, while South Korean shares fluctuated after Moon Jae In's presidential victory. The yen and gold pared an advance.

Strength in safe haven assets triggered by concerns over North Korea's nuclear programme eased during the morning in Asia. Australian banks declined after they were slapped with a new tax in the country's budget. The greenback slipped after reaching the highest in a month on Tuesday (May 9) in the wake of hawkish comments from Federal Reserve officials.

Japan's Nikkei 225 Stock Average is closing in on the 20,000 level, and AMP Capital Investors Ltd says cheap valuations and relative underperformance will allow for further gains.

Chinese shares are in focus after a rout that's caused more than US$500 billion (S$705 billion) in financial damage took a pause on Tuesday (May 9). Markets in India, Malaysia, Sri Lanka, Singapore and Thailand are closed for holidays.

Optimism for global economic growth is helping drive down expectations for volatility in equity and fixed-income markets. China data on consumer and producer prices provide the latest figures for investors to assess on Wednesday (May 10).

With global stocks trading near record highs, earnings need to keep delivering to appease investors getting restless about higher equity valuations.

Here are key events investors will be scrutinising:

Chinese CPI and PPI data are due. Producer prices are roaring back to end four years of declines. They rose 6.7 per cent in April, according to economists surveyed by Bloomberg, after a 7.6 per cent gain in March.

Earnings are expected from companies including Toyota Motor Corp., Deutsche Telekom AG and Snap Inc. The Bank of England on Thursday (May 11) publishes its interest-rate decision and quarterly Inflation Report.

Here are the main moves in markets:

The yen traded at 113.93 per dollar as of 10.19am in Tokyo, little changed after jumping as much as 0.3 per cent earlier. The currency fell during the past three sessions to the lowest level since mid-March.

The Bloomberg Dollar Spot Index lost 0.2 per cent after climbing 0.4 per cent on Tuesday (May 9). Japan's Topix index increased 0.4 per cent and South Korea's Kospi added 0.2 per cent.

Australia's S&P/ASX 200 gained 0.2 per cent, reversing earlier declines. Futures on the S&P 500 slipped 0.2 per cent. The underlying gauge fell 0.1 per cent on Tuesday (May 9), while the CBOE Volatility Index edged higher after closing on Monday (May 8) at the lowest since December 1993. The Stoxx Europe 600 closed up 0.5 per cent at the highest since August 2015.

The yield on 10-year Treasury notes fell one basis point to 2.39 per cent. Australian 10-year yields dropped one basis point to 2.67 per cent.

Gold was flat, erasing an earlier gain of 0.3 per cent.

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