Asian equities took another leg higher after the S&P 500 Index rose to a record high and Treasuries tumbled, with less damage than originally feared from Hurricane Irma supporting the case for a gradually improving U.S. economy.
Japan’s Topix index added to Monday’s rally, the biggest in three months, while South Korean and Australia equities climbed. The S&P 500 jumped the most since April to close at its first record in a month. Bloomberg’s dollar index steadied after recouping some of last week’s slump on Monday. Oil also held gains triggered by signs that predictions about Irma’s wrath were overdone.
Moves in favor of risk assets that began Monday were built on throughout the day and into Asian trading on Tuesday morning, supported also by a lack of further provocative developments from North Korea. The UN Security Council on Monday approved a watered-down proposal to punish the nation for its latest missile and nuclear tests, omitting an oil embargo and a freeze of Kim Jong Un’s assets.
“What road seems to be traveled now is one of negotiation rather than provocation. There has been a reversal of the tactics over the last week and I think that’s what the markets are seeing,” Jefferies Chief Global Strategist Sean Darby told Bloomberg Television, referring to the UN vote. “The irony at the moment is that for risk-takers the environment is very good. The inflation data is nowhere near as strong to force the hand of the central banks and economic data is actually getting better.”
Markets in the Philippines are shut as heavy rain and flooding from tropical depression Maring descends on the country.