SYDNEY (Reuters) – Asian equities rose on Monday as tensions eased on the Korean peninsula and earnings rose in the first quarter, although some investors were cautious amidst the smoldering US-China trade dispute.
MSCI's Asia-Pacific's broadest index outside Japan .MIAPJ0000PUS climbed 0, 9 percent after more than 1 percent on Friday. The index should rise slightly this month after two consecutive losses.
The South Korean KOSPI index .KS11 rose 0.6 percent and is expected to rise by nearly 2.5 after the record-breaking gains of technology giant Samsung Electronics ( 005930.KS ) and a spectacularly successful inter-Korean summit in late April Percent increase.
The Hong Kong Hang Seng Index .HSI climbed 1.6 percent, the Australian benchmark index gained 0.5 percent, while the New Zealand Stock .ZZ50 suffered early losses, which rose 0.3 percent.
Liquidity was low on Monday, while Japan, China and India were on vacation and a large part of Asia closed on Tuesday.
Overall, equities continue to be supported by strong corporate earnings in the first quarter. More than half of the Wall Street S & P 500 .SPX companies have reported and 79.4 percent have fallen short of consensus estimates.
Analysts now expect earnings growth of 24.6 percent, more than twice the forecasts at the beginning of the year and strong tax cuts.
But investors have become increasingly nervous as the US Federal Reserve signals faster rate hikes this year and the European Central Bank will soon end its generous bond-buying program.
"The key issue for 2018 remains to what extent the favorable environment will persist," said Jacob Mitchell, chief investment officer of the Australian investment boutique Antipodes, which manages A $ 7 billion in assets.
Global equity markets had a dream in 2017, helped by the first synchronous world growth in decades and loose monetary policy in most of the developed world.
"We believe that the unusually favorable combination of Goldilocks from accelerating growth and tenuous inflation in 2017 will not be repeated," Mitchell added.
"Instead, the normalization of interest rate policy will disrupt the rhythm with more volatile and less resilient markets."
In fact, the MSCI Asia ex-Japan index in 2018 has been almost unchanged, compared with more than 13 percent in the same period last year.
E-Mini futures for the S & P 500 ESc1 rose 0.2 percent after Wall Street was barely changed on Friday after a turbulent week. [.N]
Investors will focus this week on a stream of data from the US, including later-day consumer spending, the Fed's monetary policy decision on Wednesday and a working report on Friday.
Separately, a delegation of US officials, including Finance Minister Steven Mnuchin and President Donald Trump's leading economic and trade advisers – Larry Kudlow, Robert Lighthizer and Peter Navarro – are expected to negotiate for trade in China this week.
Relations between the US and China had deteriorated earlier this year, when Trump announced tough tariffs on some Chinese imports and launched a backlash from Beijing.
Political tensions on the Korean peninsula are also showing signs of easing last week, following a historic summit meeting between North Korean leader Kim Jong Un and South Korean President Moon Jae-in, as they pledged "complete denuclearization."
U.S. US Secretary of State Mike Pompeo said on Sunday that he told Kim that the North Korean head of state would have to agree to "irreversible" steps to abandon nuclear weapons if he wanted to reach a deal with Trump.
Sterling was struck in Asia at an early stage when the British Home Secretary resigned – leading to significant problems for Prime Minister Theresa May's government.
The pound last bought £ 1.3772 = D4, down 0.9 percent on Friday, as disappointing economic growth data challenged expectations that the Bank of England would raise interest rates in May. A few weeks ago, it was as high as $ 1,4377.
"GDP pressure missed the already lowered expectations and May was quickly converted to about 25 percent chance of a rate hike," Citi analysts wrote in a note.
"We do not expect a rate hike next month and expect a more cautious session than currently expected."
The US dollar has barely changed on Friday following its retreat against six major competitors at 91,567. DXY.
The Euro also rose to $ 1.2125 =, while the Dollar on the Yen rose to 109.12 JPY, although it had a hard time breaking resistance at 109.50.
The oil price rebounded from the recent highs with Brent crude oil futures LCOc1 by 33 cents to $ 74.31 a barrel, while the US crude oil CLc1 lost 18 cents to $ 67.92.
Spot Gold reduced initial gains to $ 1,321.9 an ounce.
Reporting by Swati Pandey and Wayne Cole; Editing by Eric Meijer & Shri Navaratnam