Asia report: Most markets higher despite North Korea tension

Most markets in Asia were higher on Monday, as traders sifted through Chinese PMI data and largely ignored a tightening of geopolitical tensions in the north of the region after North Korea fired yet another sea-bound ballistic missile.

In Japan, the Nikkei 225 was down 0.17% at 19,925.18, as the yen gained on the dollar, last moving 0.12% ahead to JPY 110.55.

Data out in Tokyo during the day included industrial production numbers, which showed a rise in production of 1.6% month-on-month in June - just shy of a Reuters-polled estimate for 1.7%.

It was still a turnaround from May’s 3.6% decline, however.

A number of firms reported in Tokyo after the close, with Japan Airlines reporting a 12% improvement in first quarter earnings year-on-year to JPY 24.7bn.

The airline also revised its earnings forecast in the positive direction, to JPY 153bn from JPY 142bn.

Mizuho Financial Group also reported after the session ended, with net profits down 10.8% in the first quarter to JPY 118.3bn.

On the mainland, the Shanghai Composite finished 0.64% higher at 3,274.13, and the smaller, technology-heavy Shenzhen Composite gained 0.57% to 1,879.10.

Metals firms were among the top movers in China, with Shanghai-listed shares in Aluminium Corporation up 9.93%, and Baotou Steel ahead 10.2%.

On the data front, the official manufacturing PMI for July was released by Beijing during the session, which just missed forecasts at 51.4, against a Reuters-polled consensus for a 51.6 reading and a June figure of 51.7.

The country’s official services PMI was also lower than the prior month, at 54.5 compared to 54.9.

“China's PMIs suggest further expansion, albeit with measured acceleration,” noted Chang Wei Liang, a forex strategist at Mizuho Bank.

“This is consistent with a pick-up led by electronics and infrastructure-related activities.”

South Korea’s Kospi eked out gains of 0.07% to close at 2,402.71, while the Hang Seng Index in Hong Kong rocketed 1.28% to 27,323.99.

Retailers were mixed in Seoul, with Lotte Himart up 4.66%, while Hyundai Department Store was down 1.77%, Lotte Shopping slid 8.52% and Shinsegae closed 1.45% softer.

Geopolitical tensions were on the agenda, if not very highly for some traders, after North Korea launched a missile into the sea again on Friday.

The US responded by sending two B-1B bombers on a flight over the Korean Peninsula.

Oil prices were slightly higher in Asian trading, with Brent crude last up 0.19% at $52.62 per barrel and West Texas Intermediate rising 0.06% to $49.74.

In Australia, the S&P/ASX 200 was up 0.31% at 5,720.59, underpinned by strength in the materials subindex, which was ahead 1.52%.

New Zealand’s S&P/NZX 50 was up 0.7% at 7,693.99, led higher by infant food and dairy products exporter A2 Milk, which gained 3% to come within 11 Kiwi cents of its record high reached last week.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.13% at AUD 1.2539, and the Kiwi losing 0.44% to NZD 1.3366.