Yen Soars on Korea Tensions; Asia Stocks Rise

Escalating geopolitical tensions sparked a rise in the yen, while most Asian equities advanced as investors assessed statements from China’s National People’s Congress and Federal Reserve Chair Janet Yellen.

The Topix and U.S. stock futures were lower as Japan moved to the highest possible alert level after North Korea fired four ballistic missiles into nearby waters. Equities were mostly higher elsewhere, with shares in Hong Kong and Shanghai advancing. The 10-year U.S. Treasury yield was steady after gaining for five straight days. Gold retreated with oil.

The latest provocation from Kim Jong Un’s regime comes as South Korea and the U.S. undertake annual military drills that Pyongyang has called a prelude to an invasion. Tensions have been rising over North Korea, which also conducted a missile test during Abe’s state visit to the U.S. last month and is suspected of being behind the assassination of its leader’s half brother in Malaysia.

Chinese small-cap stocks and power companies were the biggest beneficiaries from the ongoing annual legislative meetings in Beijing. Premier Li Keqiang set a 2017 growth target of “around 6.5 percent, or higher if possible” in a report to the NPC that reiterated the pursuit of neutral monetary policy this year.

As for U.S. monetary policy, Yellen joined a chorus of Fed officials who have suggested growth remains on track to warrant higher interest rates as early as next week’s central bank meeting. Fixed-income markets indicate a greater than 80 percent chance of a hike in March, with a monthly jobs report on Friday and a read on inflation the day of the decision looming as slight risks.

Here are the main moves in markets:

Currencies

· The yen rose 0.2 percent to 113.82 per dollar as of 3:32 p.m. in Tokyo. The South Korean won fell 0.1 percent. The Bloomberg Dollar Spot Index climbed 0.1 percent, after slipping 0.7 percent on Friday to halt a five-day rally.

Stocks

· The MSCI Asia Pacific Index advanced 0.3 percent. India’s Sensex climbed 0.6 percent, to trade near the highest level since September.

· The Kospi rose 0.3 percent, erasing an earlier loss of 0.5 percent as Samsung Electronics Co. jumped 1.3 percent. The Topix retreated 0.2 percent, after sliding 0.5 percent earlier.

· Futures on the S&P 500 declined 0.3 percent. The benchmark index gained less than 0.1 percent on Friday to end higher for a sixth straight week.

· Hong Kong’s Hang Seng added 0.2 percent while the Shanghai Composite Index increased 0.3 percent.

Bonds

· Yields on 10-year Treasuries fell less than one basis point to 2.47 percent, while those for Australian government bonds were little changed at 2.80 percent.

Commodities

· Gold fell 0.2 percent to $1,232.91 an ounce. The metal had its worst performance of the year last week, falling 1.8 percent.

· Crude slipped 0.5 percent to $53.05 a barrel. Futures jumped 1.4 percent on Friday after a three-day drop.

· Copper lost 0.3 percent, erasing an earlier gain.

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