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Asia shares buoyed as S&P 500 touches new record

Tuesday 03:30 BST

What you need to know

  • Asia shares buoyed by fresh S&P 500 record
  • Oil dips and gold continues retreat as geopolitical risk eases
  • Renminbi lower after shorting restrictions eased

Overview

Haven assets continued to lose their lustre and equities found favour as the weekend’s dual threats of damage from Hurricane Irma and the potential for a North Korean weapons test receded.

The MSCI International ex-Japan index tracking Asia-Pacific hit a 10-year high on the heels of a record close for the S&P 500 in New York, while gold and government bonds in the region fell.

Hot topic

The renminbi slipped to Rmb6.5254 per dollar after China’s central bank weakened the daily fix by the most since January. The People’s Bank of China set the midpoint around which the renminbi can trade 2 per cent in either direction at Rmb6.5277 — 0.4 per cent softer from the previous day.

The Chinese currency hit a 21-month high against the dollar on Friday, but its advance halted after the PBoC on Friday dropped a requirement that had increased the cost of betting against the currency. That handed the renminbi its worst day in three months on Monday.

The dollar index, which measures the greenback against a basket of peers, was up 0.1 per cent in Asia trading.

Equities

Asia shares climbed following another record closing high for the S&P 500, with the MSCI International ex-Japan index tracking Asia Pacific shares rising 0.6 per cent to a 10-year high.

In Tokyo, the Topix index was up 0.9 per cent while South Korea’s Kospi Composite added 0.2 per cent. On the mainland the Shanghai Composite index rose 0.2 per cent, while in Hong Kong the Hang Seng gained 0.2 per cent.

Insurers led the gains in the US as the value of expected damages for the insurance industry from Hurricane Irma was revised from $100bn to $20bn after the storm weakened and changed direction.

Australia’s benchmark S&P/ASX 200 was up 0.7 per cent. The S&P/ASX All Ordinaries Gold Index of Australian gold producers was down 2 per cent, as the yellow metal’s haven status receded after touching a five-month high late last week.

Commodities

Investors have “piled back into riskier asset classes” as the weather and geopolitical risks have eased, ANZ said. As risk appetite improved, gold came further off recent highs, slipping 0.1 per cent to $1,325 per ounce. The price of the precious metal hit $1,348 on September 7, its highest in more than a year.

The downgrading of the impact of Hurricane Irma weighed on oil prices. Brent crude, the international benchmark, retreated 0.2 per cent to $53.74 a barrel after touching its highest since May late last week. West Texas Intermediate, the main US contract, was off 0.1 per cent at $48.04.

Fixed income

Sovereign bonds in the region were declining, pushing up yields, which move inversely to price. The yields on the 10-year Australian government bond was up 3 basis points at 2.628 per cent, while that on the equivalent Japanese note was also up 3 bps at 0.013 per cent. The 10-year US treasury yield was flat at 2.12 per cent.

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