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Asia stocks rise, won drops amid North Korea worry

Sydney - Asian stocks resumed a rally as Hong Kong shares jumped to a 21-month high. US stock-index futures slipped as Donald Trump fired FBI Director James Comey, while the won fell on concern over North Korea’s nuclear programme.

Chinese companies listed across the border soared even as shares in Shanghai turned lower. South Korean shares dropped from an all-time high following Moon Jae-in’s presidential victory. The won declined as Pyongyang pledged to push forward with another nuclear test.

The greenback slipped after reaching the highest in a month Tuesday in the wake of hawkish comments from Federal Reserve officials. The Nikkei 225 Stock Average closed in on the 20 000 level ahead of earnings by Japan’s biggest companies.

Investors have focused on the China market after a selloff erased at least $450bn from the value of stocks and bonds since mid-April, amid policy makers’ moves to crack down on leverage.

Chinese data on Wednesday showed producer price gains slowed more than expected in April, adding to signs of a potential easing of global reflation fueled by the world’s second-largest economy.

Optimism for global economic growth is helping drive down expectations for volatility in equity and fixed-income markets. With global stocks trading near record highs, earnings need to keep delivering to appease investors getting restless about higher equity valuations.

President Trump’s dismissal of Comey comes amid the agency’s investigation of Russian interference in last year’s election. He said the bureau needed new leadership to restore “public trust and confidence.” Read more here.

Here are key events investors will be scrutinizing:

Earnings are expected from companies including Deutsche Telekom and Snap, Toyota and SoftBank posted results after the close of Japanese markets. The Bank of England on Thursday publishes its interest-rate decision and quarterly Inflation Report.

Here are the main moves in markets:

Stocks

The Hang Seng rose 0.9% as of 08:39, to the highest level since July 2015. The Hang Seng China Enterprises Index jumped 1.4%, rallying for a third straight day. The Shanghai Composite Index retreated 0.7%, erasing an advance of 0.3%. The gauge traded at the lowest level since October earlier in the week.

Japan’s Topix index increased 0.2% and the Nikkei 225 rose 0.3%. AMP Capital Investors says cheap valuations and relative underperformance will allow for further gains for Japanese shares.  South Korea’s Kospi slid 1% after surging 2.3% on Monday, the most since September 2015. Markets in Malaysia, Sri Lanka, Singapore and Thailand are closed for holidays.

India’s bond and foreign-exchange markets are also shut, while equity trading operates. Futures on the S&P 500 slipped 0.2%. The underlying gauge fell 0.1% on Tuesday, while the CBOE Volatility Index edged higher after closing on Monday at the lowest since December 1993.  Contracts on the Euro Stoxx 50 slumped 0.3%. The Stoxx Europe 600 closed up 0.5% on Tuesday at the highest since August 2015.

Currencies 

The South Korean won fell 0.4%. The yen strengthened 0.1% to 113.93 per dollar. The currency fell during the past three sessions to the lowest level since mid-March. The Bloomberg Dollar Spot Index lost 0.1% after climbing 0.3% on Tuesday.

Bonds

The yield on 10-year Treasury notes fell one basis point to 2.39%. Australian 10-year yields dropped three basis points to 2.66%.

Commodities

Gold was flat at $1 221.60 an ounce. The metal dropped during the previous five sessions. Oil climbed 0.7% to $46.20 a barrel, after dropping 1.2% on Tuesday.

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