Stocks bounce, havens drop as North Korea fears abate

Bloomberg

The risk-off mood that gripped markets last week showed signs of easing, with shares in Europe following Asian equities higher and American stock futures advancing as the prospect of a war between the US and North Korea receded. Havens including gold, Treasuries and
the yen fell.
The Stoxx Europe 600 Index headed for its first gain in four days, tracking increases across markets including South Korea, Australia and Hong Kong after US officials moved to tamp down fears of imminent war with North Korea. Japanese equities bucked the trend as traders returned after a holiday. Most European government bonds followed Treasuries lower. Bitcoin posted yet another surge.
Volatility gauges jumped last week and risk assets tumbled as the sudden increase in tension around the Korean peninsula jolted markets globally. The reaction was exacerbated by the rich valuations on display across multiple assets, many of which had barely corrected this year.
Meanwhile, there was a mixed bag of data out of Asia on Monday. Japan’s second-quarter growth topped estimates, reflecting better domestic demand. China’s economy posted its worst showing this year as curbs on property, excess borrowing and industrial overcapacity began to have an impact.
A crowded US data docket will give some indication of whether second-half GDP will outperform the first half. July retail sales are expected to rise from June, while housing starts and industrial production may be muted. On Wednesday, the Federal Open Market Committee will issue minutes from a July policy meeting that may hold clues on the next rate hike. The same day, Euro-area second-quarter GDP data is due. Chinese tech titans Tencent and Alibaba are among companies reporting this week. After rising 73 percent in 2017, Alibaba shares trade at a multiple of 64 times earnings. Tencent is trading at 54 times profit after a 64 percent jump. Russia’s factory output growth probably dipped to 3.3% in July year-on-year from 3.5% in June. The data is due in the early part of the week.
The Stoxx Europe 600 Index climbed 0.9 percent as of 8:50 a.m. in New York. Futures on the S&P 500 Index rose 0.6 percent, the biggest advance in almost four weeks. The UK’s FTSE 100 Index gained 0.5 percent. Germany’s DAX Index rose 1.2 percent, the biggest advance in almost four weeks. The MSCI All-Country World Index increased 0.2 percent, the first advance in a week. The Bloomberg Dollar Spot Index gained 0.2 percent to 1,159.31. The euro dipped 0.2 percent to $1.1797. The British pound fell 0.3 percent to $1.2977, the weakest in almost three weeks.
The yield on 10-year Treasuries increased three basis points to 2.22 percent. Britain’s 10-year yield gained three basis points to 1.092 percent. Germany’s 10-year yield rose four basis points to 0.42 percent. West Texas Intermediate
crude declined 0.7 percent to $48.49 a barrel, the lowest in
two weeks. Gold dipped 0.5 percent to $1,282.82 an ounce, the first
retreat in a week.
Japan’s Topix index finished 1.1 percent lower. South Korea’s Kospi index advanced 0.6 percent. Australia’s S&P/ASX 200 Index rose 0.7 percent. In Hong Kong, the Hang Seng Index gained 1.4 percent, while the Shanghai Composite Index rose 0.9 percent. The Japanese yen decreased 0.4 percent to 109.64 per dollar, the first retreat in a week.