Asia report: Markets higher as Pyongyang fails to fire

Markets in Asia were mostly higher on Monday, as investors digested developments from central banks in China and the eurozone.

In Japan, the Nikkei 225 added 1.41% to close at 19,545.77, as the yen weakened 0.63% against the dollar to last trade at JPY 108.52.

Fresh data showed an 8% month-on-month rise in core machinery orders for July, which was reportedly the first improvement in the measure for four months.

On the mainland, the Shanghai Composite was up 0.37% at 3,377.67, and the smaller, technology-heavy Shenzhen Composite closed 0.8% higher at 1,991.73.

China’s central bank said it was looking to ease its requirements for financial institutions to hold foreign exchange reserves for forward trading of renminbi as of Monday.

It came as the yuan completely reversed its 2016 decline, with the People’s Bank of China setting the currency’s loose peg at CNY 6.4997 against the greenback on Monday.

That was the first time the People’s Bank had set it below the CNY 6.5 mark since May 2016.

The central bank allows the onshore yuan to trade 2% above or below its daily loose peg.

On the data front in the People’s Republic, producer price inflation rose 6.3% year-on-year in August, it was reported over the weekend.

That was well ahead of the 5.6% improvement predicted in a Reuters poll, as well as the 5.5% advance recorded in July.

South Korea’s Kospi was up 0.66% at 2,359.08, while the Hang Seng Index in Hong Kong finished 1.04% higher at 27,955.13.

Sentiment was improved in Seoul after an expected ballistic missile launch did not eventuate on Saturday, which was a major holiday in Pyongyang celebrating the country’s founding.

“With North Korea seemingly holding back on its intercontinental ballistic missile test for now, there is a small degree of risk relief in market, resulting in the paring of long positions in safe havens,” noted Mizuho Bank strategist Chang Wei Liang.

In corporate news in Korea, carmakers Hyundai Motor and Kia Motor both said they were looking likely to miss their sales targets for 2017.

The country’s major exporters have been hard hit by ongoing diplomatic tension with China, stemming from the installation of an anti-missile defence system.

Shares in Hyundai and Kia finished down 0.37% and 0.63%, respectively.

In South Korean retail, Lotte Shopping could be looking to sell its supermarket operations in China, it was reported on Monday, depending on whether diplomatic relations between the countries improves.

Lotte Shopping stock was up 2.2%.

Oil prices were mixed, with Brent crude last down 0.51% at $53.51 per barrel and West Texas Intermediate ahead 0.59% at $47.76.

In Australia, the S&P/ASX 200 was 0.71% firmer at 5,713.15, led higher by the information technology sector, while the hefty financials subindex was up 1.55%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was flat, adding 0.003% to 7,851.75.

It was a mixed picture for the down under dollars, with the Aussie last 0.07% weaker at AUD 1.2419 against the greenback and the Kiwi strengthening 0.31% to NZD 1.3726.