Asian shares are slightly stronger after last week’s battering

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edge higher, but increasing tension between Saudi Arabia and the West has fanned geopolitical concerns and capped gains

 

Tokyo — Asian stocks rose modestly on Tuesday, gaining a firmer footing after a week of heavy losses, although increasing tension between Saudi Arabia and the West has fanned geopolitical concerns and capped gains.

MSCI’s broadest index of Asia- shares outside Japan nudged up 0.25%, crawling away from a 19-month trough touched on Thursday.

Japan’s Nikkei bounced 0.6% following a decline of nearly 2% the previous day.



The disappearance in Turkey in early October of a Saudi journalist critical of Riyadh has provoked an international outcry against the oil-rich kingdom, which has rattled its financial markets.

US President Donald Trump has sent secretary of state Mike Pompeo to Saudi Arabia over the case, potentially straining the relationship between the strategic allies.

“The focus of the markets has turned to the Middle East due to the Saudi incident. And with still struggling, other will have a difficult time bouncing convincingly,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

“The US has been the epicentre of the recent market tumult, with shares being hit by higher treasury yields. US shares will have to find their feet first.”

Saudi Arabia’s riyal currency retreated overnight to 3.7525 to the dollar — its weakest in two years.

Wall Street shares were dragged down overnight by a retreat in technology shares amid lingering worry over high US yields.

The Dow has lost 4.5% so far in October, pulled away from record peaks, as long-term treasury yields soared to their highest level since 2011. Higher yields are seen eroding the allure of equities.

Hong Kong’s Hang Seng added 0.15% and the Shanghai Composite Index was last up 0.1%.



Data on Tuesday showed ’s -gate inflation cooled for a third consecutive month in September amid ebbing domestic demand, pointing to more pressure on the world’s second-biggest economy as it remains locked in an intensifying trade war with the US.

Perceived safe havens such as the Japanese yen and Swiss franc have found support following the hit riskier assets have taken.

The dollar traded at ¥111.95, not far from a one-month low of ¥111.625 brushed overnight.

Against the dollar, the Swiss currency stood at Sf0.9882 after advancing 0.5% the previous day.

The euro was little changed at $1.1574, after rising 0.2% the previous day.

Sterling was at $1.3145, having bounced from a one-week low of $1.3080 plumbed on Monday amid a stalemate over the post-Brexit status of Britain’s land border with Ireland.

Currency market focus was on the US treasury’s semi-annual currency report due later in the day, with investors waiting to see Washington’s view on China after media reports last week that the department has not labelled Beijing a currency manipulator.

“It is clear that China does not meet the criteria of currency manipulator based on the current assessment, as the country’s current account surplus as a percent of GDP has fallen below 3%,” wrote strategists at OCBC Bank.



China’s yuan was a shade weaker at 6.924 to the dollar in onshore trading.

In commodities, tension between the US, the world’s top oil consumer, and Saudi Arabia, one of the biggest producers, pushed up crude prices on concerns about supply.

Brent crude futures rose 0.3% to $81.00 a barrel, stretching gains from Monday.

Safe-haven was at $1,225.51/oz, in striking distance of a near three-month high of $1,233.26 scaled on Monday.



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