Bulls And Bears

Traders hedge bets on N. Korea, tariff worry

Market reaction to talks with Pyongyang relatively muted; local trading sluggish

Regional investors awoke to surprising news that the United States and North Korea will hold their first summit, although the market reaction was relatively muted.

Most bourses recorded gains but traders seemed more concerned about hedging their bets on both the summit and fears that US President Donald Trump's metal tariffs might ignite a trade war.

The news from North Korea did send the yen - a haven during times of stress - tumbling at one point by the most in more than two weeks against the US dollar.

"We should expect this news to boost regional market sentiment as well," said Oanda's head of trading for Asia-Pacific Stephen Innes.

However, despite the positive news, Asia's attention was split between China's National People's Congress in Beijing and international reactions to the US tariffs, which exclude Canada and Mexico.

Mr Innes said: "It's abundantly clear Trump is setting his sights on China. He also called these measures 'a first stop', suggesting further escalation is around the corner."

Hong Kong reacted by rising 1.11 per cent while the Nikkei could only manage a 0.47 per cent rise. Australian stocks added 0.34 per cent after hopes that the country might also escape the tariffs.

Shares here failed to sustain early gains, with trading sluggish amid concerns over global retaliatory moves to the US tariffs.

Sentiment was also cautious ahead of the Bank of Japan rate decision and policy statement. Japan's central bank kept its policy unchanged yesterday and stuck to its upbeat view on the economy.

Also weighing on sentiment was the release of US February job data, which is expected to show further easing in unemployment.

"But the focus will be on wages which have taken on added importance as the Fed is now seen to be more hawkish on inflation expectations," said Mr Alvin Liew, an economist at UOB in Singapore.

The Straits Times Index (STI) closed up 5.13 points at 3,485.57 with 1.7 billion shares worth $1.1 billion traded. There were 247 gainers to 188 losers.

Creative Technology hit $6.82 before settling at $6.54, up 63 cents or 10.7 per cent. The stock got a boost after more analysts and IT media experts backed its Super X-Fi system.

Dairy Farm closed lower after its full-year results missed estimates.

UOL Group added 14 cents to $8.75 as analysts call a buy on attractive valuations. DBS recently raised its target price to $10.23.

A version of this article appeared in the print edition of The Straits Times on March 10, 2018, with the headline 'Traders hedge bets on N. Korea, tariff worry'. Subscribe