Stock markets across Asia rallied on Monday following fresh record closes on Wall Street, with South Korea’s benchmark index leading gains, for now brushing aside concerns of more tension in the Korean Peninsula.
After a dip in risk appetite toward the end of last week, markets regained some upward momentum as global investors sold their safe haven hedges and returned to riskier assets. Korea’s Kospi South Korea’s Kospi SEU, +1.35% ended up 1.4%, logging its biggest gain since May, propelled by a 4.1% jump in index heavyweight Samsung Electronics 005930, +4.13%
On Friday, the Dow Jones Industrial Average DJIA, +0.29% on Friday posted its biggest weekly gain of the year. The S&P 500 SPX, +0.18% also hit a fresh closing high.
In Australia, the S&P/ASX 200 XJO, +0.45% ended 0.5% higher, supported by strong gains in bank shares.
“The trend to rotate out of materials and into financials exposures seems likely to continue today,” said Chris Weston, chief market strategist at IG Group.
Meanwhile, Hong Kong’s Hang Seng Index HSI, +1.27% rose 1.3%, while Singapore’s Straits Times Index added 0.8%. Markets in Japan were closed Monday for a public holiday.
Despite concerns of higher valuations, China’s benchmark indexes also advanced, with the Shanghai Composite Index’s SHCOMP, +0.28% 0.3% gain lifted by gains in alcohol and brokerage shares.
On Friday, a Chinese regulator said it would relax margin requirements and transaction fees on stock-index futures, indicating Beijing’s confidence that the market has largely stabilized since the rout in 2015. But the move has had little impact so far, as additional fund inflows have been incremental, said BOC International analyst Jacky Zhang.
In New Zealand, the NZX 50 Index NZ50GR, -0.05% lost 0.1%, with shares of New Zealand Refining NZR, -3.63% and Air New Zealand AIR, -1.08% leading declines, as stock selling continued after a Thursday pipeline rupture at a refinery that services New Zealand’s busiest airport.
More flights at Auckland’s international airport on Monday were being canceled or delayed due to a fuel shortage caused by the pipeline leak. After falling a combined 2% the last three sessions, New Zealand Refining dropped 3.6% Monday, while Air New Zealand fell 1.1%.
In foreign exchange, the U.S. dollar JPYUSD, -0.408856% edged up against a basket of currencies, with the WSJ Dollar Index BUXX, +0.14% rising 0.2%. The Commonwealth Bank of Australia said it expects the dollar to consolidate this week.
While the Federal Reserve is widely expected to stand pat on rates this week, expectations are for the Federal Open Market Committee to begin cutting the central bank’s balance sheet, though the impact will likely be limited.
“Although this policy represents a real tightening, it is pretty marginal on a month by month basis, almost totally expected, and therefore, should be almost completely priced in,” said Rob Carnell, head of Asia research at ING.