Asian markets mixed as sentiment improves but geopolitical concerns still weigh

Asian stocks were mixed on Monday, with market participants digesting elections in Germany and New Zealand, while keeping an eye on further developments from the Korean peninsula.

Australia ASX +1.10 +0.02% 5,741.70 CLOSED

Shanghai Comp -12.45 -0.37% 3,340.08 CLOSED

Hang Seng Index -324.83 -1.17% 27,555.7 OPEN

Nikkei 225 +101.13 +0.50% 20,397.58 CLOSED

TSEC 50 Index -113.79 -1.09% 10,335.89 CLOSED

The latest polls showed that Merkel’s Christian Social Union won Sunday’s Federal Elections with 32.5 percent of the vote, remaining as the leading party in the Parliament, although it notched down from a 41.5 percent registered in the 2013 election.

The Social Democrats (SPD) dropped to a mere 20.0 percent, while the far-right AfD party managed to get 13.5 percent of the vote, allowing it to enter the parliament for the first time.

Now Merkel needs to negotiate with other parties to form a coalition government in order to stay in change of the Europe’s first economy for a few more years.

In New Zealand, Prime Minister Bill English's National Party was able to come out first in the vote, but did not get enough support for securing a majority in parliament. English will also have to negotiate with other parties to form a coalition government.

Meanwhile, Japanese Prime Minister Shinzo Abe said a snap election will be held next month. The idea behind this action is to take advantage of his improved ratings.

Market sentiment continued to improve on Monday, but was still cautious in the light of a 3.4 magnitude earthquake detected in North Korea’s Kilju area, only 4 miles away from where Pyongyang conducted its hydrogen bomb test on September 3.

The quake increased speculation that Kim Jong Un’s government might have tested a new nuclear bomb, as a top North Korean official anticipated last Friday.

However, scientists explained this movement could be only a stress reaction to the latest hydrogen bomb test, pointing out a natural cause is most likely.

On Friday the Dow Jones Industrial Average ended in green territory at 22349.59, with the S&P 500 adding 0.06 percent and the Nasdaq Composite 0.46 percent to close at 6426.92.

Ahead in the day, investors will focus on speeches from FOMC members Dudley and Kashkari as of 12:30 GMT and 22:30 GMT. European Central Bank President Mario Draghi is set to speak at 13:00 GMT before the European parliament in Brussels.

Fort Financial Services