Friday, 22 September 2017

North Korea’s new nuclear threat pushes Asian indexes down

Posted by Valentine at 11:14 Labels:

Asian stocks dropped on Friday as North Korea’s foreign minister said the communist nation is considering the possibility of a hydrogen bomb test on the Pacific Ocean.

The latest nuclear test conducted by North Korea resulted on a new package of economic sanctions that significantly reduced the country’s energy supply and banned all textile trade, which was one its main sources of foreign income.

Last week, President Trump spoke directly with his South Korean counterpart and agreed that further sanctions should be applied against Kim Jong Un’s regime.

Australia ASX +23.90 +0.42% 5,740.60 CLOSED
Shanghai Comp -8.17 -0.24% 3,349.64 OPEN
Hang Seng Index -202.82 -0.72% 27,907.51 OPEN
Nikkei 225 -51.03 -0.25% 20,296.45 CLOSED
TSEC 50 Index -128.76 -1.22% 10,449.68 CLOSED

The safe-haven demand was boosted by the North Korean threat, sending the yen as far as 112.4 and providing some support to gold to trade near $1,300 per troy ounce.

These category of assets came under pressure earlier this week, as the Federal Reserve announced it will start unwinding its massive $4.5 trillion balance sheet in October and hinted on a possible third rate hike by end of this year.

Fed’s dot plot, which measures expectations of each member of the Federal Open Market Committee in regard to interest rates, showed the range 1.25-1.50 percent as a popular choice.

According to Fed funds tracked by CME Group’s FedWatch tool, traders are currently pricing in a 70.5 percent probability of a 25 basis points rate hike by December.

Other central bank news this week included the Bank of Japan’s decision to keep its current monetary configuration unchanged. Governor Haruhiko Kuroda said that the “central bank will add more stimulus if needed”. Rates are currently standing at minus 0.1 percent.

Moving into the European session, investors will turn to the release of German manufacturing and services PMIs for September as of 07:30 GMT.

Also, European Central Bank President Mario Draghi is also scheduled to speak at 08:00 GMT and by that time we’ll count on activity data from the EU.

In the United States, attention will be directed to speeches from FOMC members Williams, George and Kaplan as of 10:00 GMT, 13:30 GMT and 17:30 GMT respectively.

The US manufacturing and services PMI indexes will be available as of 13:45 GMT.

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