Asia: Stocks mixed as missile offsets US rally

[SYDNEY] Asian stocks were mixed as Chinese equities added to declines and a North Korean missile test overshadowed a surge in US equities. The US dollar was steady as US tax cuts inched closer to reality.

Shares rose in Tokyo and Sydney and fell in Hong Kong after the S&P 500 Index jumped one per cent as the Senate budget committee advanced the Republican tax bill, also buoying the greenback.

Stocks in Seoul gave up earlier gains as investors considered the latest intercontinental ballistic missile launch from North Korea. Bitcoin surpassed US$10,000 for the first time, bringing this year's price surge to more than 10-fold.

"The crux of it is that people ascribe a very low likelihood of it developing into something more sinister," said Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about US$7 billion.

"Markets are choosing to focus on the positives: that tax reform might be more likely, we're still getting good corporate news, and all the economic data is ticking over pretty nicely."

North Korean leader Kim Jong Un said his regime completed its nuclear programme after firing a missile that put the entire US in range. The missile launch shattered a two-month period of relative quiet in its first provocation since US President Donald Trump's decision this month to label the country a state sponsor of terrorism.

Mr Trump responded that "we will take care of that situation". The US and Japan said the projectile was fired early Wednesday Japan time from North Korea's west coast at a lofted trajectory before landing in the Sea of Japan.

The Senate tax bill is headed for a marathon debate this week after the budget committee voted Tuesday along party lines to send the Republican plan to the floor. Republican holdouts, Bob Corker of Tennessee and Ron Johnson of Wisconsin, dropped their objections shortly before the vote.

Fed chairman nominee Jerome Powell faced his Senate confirmation hearing in Washington, saying during testimony the case for a December rate hike "is coming together".

In a statement ahead of the meeting, the current member of the board of governors signalled broad support for how the Fed operates, regulates and guides the economy.

US consumer confidence unexpectedly improved in November to a 17-year high, a sign Americans are growing more upbeat about the economy and labour market. That comes as global equities head into the end of the year at record highs, on track for one of the best year's since the immediate aftermath of the global financial crisis.

HERE ARE SOME KEY EVENTS COMING UP THIS WEEK:

In China later this week, the official and Caixin manufacturing PMIs are expected to show mostly steady momentum.

Japan industrial production is forecast to have rebounded in October, but CPI may show a sharp divergence between headline and core inflation, Bloomberg Intelligence said.

The second print of third-quarter US GDP on Wednesday may be revised up thanks to consumer spending and inventory accumulation, Bloomberg Intelligence said. The core PCE deflator, the Fed's preferred gauge of inflation, is due Thursday.

Opec meets in Vienna on Thursday.

STOCKS

The Topix index gained 0.7 per cent as of 2.16pm in Tokyo and the Nikkei 225 Stock Average rose 0.4 per cent.

Hong Kong's Hang Seng Index slipped 0.2 per cent and the Shanghai Composite Index was down 0.6 per cent.

Australia's S&P/ASX 200 Index rose 0.5 per cent.

The Kospi index was flat.

Futures on the S&P 500 Index fell less than 0.1 per cent. The underlying gauge rose 1 per cent Tuesday.

The MSCI Asia Pacific Index rose 0.1 per cent.

CURRENCIES

The Bloomberg Dollar Spot Index was steady.

The yen was little changed at 111.52 per US dollar.

The Korean won rose 0.3 per cent to 1,081.65 per US dollar, shrugging off the threat from North Korea. The markets are preparing for a Bank of Korea rate decision on Thursday.

The euro was at US$1.1851.

The pound rose 0.2 per cent to US$1.3366. It got a boost on reports of a breakthrough in negotiations over the UK's exit from the European Union.

Bitcoin was trading at US$10,594.70.

BONDS

The yield on 10-year Treasuries was little changed at 2.33 per cent.

Australia's 10-year yield fell more than two basis points to 2.47 per cent.

COMMODITIES

West Texas Intermediate crude lost 0.5 per cent to US$57.68 a barrel, down for a third day. US industry data showed crude stockpiles expanded before Opec meets to decide on prolonging supply cuts past the end of March.

Gold rose 0.1 per cent to US$1,295.77 an ounce.

BLOOMBERG