Asian traders cautious after sell-off as N. Korea tensions linger

06-Sep-2017 Intellasia | AFP | 6:00 AM Print This Post

The US has called on the United Nations to impose the ‘strongest possible measures’ against Kim Jong-Un’s regime and said the country was ‘begging for war’

Asian markets struggled on Tuesday while the safe-haven yen and gold held gains as traders fretted over North Korea’s weekend nuclear test which prompted warnings of US military action.

The US ambassador to the United Nations Nikki Haley told an emergency Security Council meeting that Pyongyang was “begging for war” and called for the “strongest possible measures” against Kim Jong-Un’s regime.

Also, US President Donald Trump and his South Korean counterpart Moon Jae-In agreed to remove limits on the payload of the South’s missiles.

The test, which North Korea says was of a hydrogen bomb, came less than a week after it fired a rocket over Japan, while Seoul said there were signs it was preparing to launch another.

At a BRICS summit on Tuesday, Russian President Vladimir Putin warned of a potential “global catastrophe” over the crisis.

Sunday’s provocative test sparked heavy selling in Asian stocks Monday and markets were unable to stage any meaningful recovery on Tuesday.

Seoul ended down 0.1 percent after shedding more than one percent the day before, while Tokyo dropped 0.6 percent as exporters were weighed down by the stronger yen.

Hong Kong ended flat and Shanghai, which managed to eke out gains Monday, added 0.1 percent. Wellington retreated but Singapore added 0.4 percent. Sydney finished 0.1 percent higher.

In early European trade, London and Paris each rose 0.1 percent while Frankfurt gained 0.2 percent.

“Investors in Asia have limited leads to follow,” Citigroup analysts led by Johanna Chua wrote in a client note, according to Bloomberg News.

They added that the North usually ramps up the belligerence around key anniversaries, the next of which is on September 9.

“Tensions linger and it’s difficult for risk aversion sentiment to disappear,” Naoto Ono, a currency analyst at Ueda Harlow in Tokyo, said in a note.

Analysts said traders will be eyeing Wall Street’s reaction to the latest events, having been closed Monday for Labour Day.

On currency markets the yen extended gains against the dollar as investors sought out safety, while gold held around one-year highs.

But while tensions are high, Greg McKenna, chief market strategist at AxiTrader, said: “For now, traders and investors are taking the approach that there will be no escalation beyond words.

“Markets will react violently if a military conflict erupts on the Korean peninsula. But overnight it’s clear traders are betting that things will de-escalate.”

– Key figures around 0820 GMT -

TokyoNikkei 225: DOWN 0.6 percent at 19,385.81 (close)

SeoulKospi: DOWN 0.1 percent at 2,326.62 (close)

Hong KongHang Seng: FLAT at 27,741.35 (close)

ShanghaiComposite: UP 0.1 percent at 3,384.32 (close)

LondonFTSE 100: UP 0.1 percent at 7,420.76

euro/dollar: DOWN at $1.1880 from $1.1915 on Monday

Pound/dollar: DOWN at $1.2917 from $1.2955

Dollar/yen: DOWN at 109.40 yen from 109.55 yen

OilWest Texas Intermediate: UP 25 cents at $47.54 per barrel

OilBrent North Sea: DOWN 12 cents at $52.22

New York: Closed for public holiday.


Category: FinanceAsia

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