HONG KONG: Hong Kong led a rally across most Asian markets on Monday as traders brushed off a slowdown in the US economy, while the boost from last week’s historic North-South Korea summit continue to support Seoul and the won.
Asian markets have started the week on a positive note, with Seoul extending last week’s gains after the historic summit between Moon Jae-in and Kim Jong Un.
While figures on Friday showed growth in the world’s top economy slowed in January-March, tech firms on Wall Street won support after healthy earnings from Amazon, Microsoft and Intel.
The positive lead from New York provided some much-needed help to Asian tech firms, which have been hammered in recent weeks by worries about the lucrative smartphone market.
Hong Kong-listed AAC Technologies rose more than two percent and Tencent added one percent, while in Taipei, Apple suppliers TSMC and Foxconn were also sharply higher.
On broader markets Hong Kong surged 1.6%, with a better-than-forecast Chinese factory activity reading also providing support as it eased concerns about a slowdown in the mainland economy.
Seoul was 0.6% higher, while Sydney gained 0.5%.
Singapore surged more than one percent, while Wellington, Manila, Taipei and Jakarta were all deep in positive territory.
Tokyo and Shanghai are closed for public holidays.
South Korean traders remain upbeat after Friday’s meeting between President Moon Jae-in and Kim Jong Un, which fuelled hopes for peace on the peninsula and Pyongyang’s possible denuclearisation.
China-US trade hopes
Adding to the positive news Kim said he would shut the North’s atomic test site within weeks and invite American weapons experts to verify its closure, while new US Secretary of State Mike Pompeo said Washington had an “obligation” to pursue peace.
The developments, which come weeks before a planned summit between Kim and Donald Trump, have helped push the won up more than one percent against the dollar.
That comes even as the dollar enjoys a fresh bout of buying thanks to broadly positive mood about the world economy and easing worries over the China-US trade spat.
“This week’s US trade roadshow to China, which includes (key Trump administration officials) Steven Mnuchin, Robert Lighthizer and Larry Kudlow, has undoubtedly calmed investors nerves triggering an unwind of dollar risk premiums around tariff and trade,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
“Also, the North Korea talks should play out favourable for the dollar as it evaporates much of the political risk weight that has been hanging around (it) like an anvil in recent months.”
The greenback held on to gains against the pound, which took a battering last week after data showed British economic growth slowed sharply in the first three months of the year. The news all but killed any remaining expectations for a Bank of England interest rate rise in May.
Attention this week turns to the Federal Reserve’s latest policy meeting. While it is not expected to hike borrowing costs its statement Wednesday will be scanned for clues about future moves.
That is followed by the release Friday of US jobs figures for April, which will provide a fresh look at the economy and give an idea about the Fed’s monetary policy plans.