Asian markets, won sink after N.Korea's latest nuclear test | Fin24
  • Credit Rating

    Moody's has (again) said that weak state-owned entities are a risk to SA's sovereign credit rating.

  • SARS Inquiry

    Judge Nugent has recommended the president sack suspended SARS boss Tom Moyane.

  • Nene Rand Rollercoaster

    Simon Brown says savvy investors worked out how the rand would react to uncertainty at Treasury.


Asian markets, won sink after N.Korea's latest nuclear test

Sep 04 2017 07:35

Hong Kong - Asian stocks tumbled with the South Korean won on Monday while the safe haven yen rallied on news that North Korea had tested what it claimed was a miniaturised hydrogen bomb, ramping up tensions on the peninsula.

Less than a week after it rattled global markets by firing a rocket over Japan, Pyongyang on Sunday conducted its sixth nuclear test, sparking further condemnation and a warning from defence secretary Jim Mattis of a "massive military response" from the US.

On Sunday in the United States, the White House said President Donald Trump stands ready to use the country's "full range of diplomatic, conventional, and nuclear capabilities" if North Korea continues to threaten it or its allies.

Trump earlier denounced the test, tweeting that the time for "appeasement" was over and threatening drastic economic sanctions, including "stopping all trade with any country doing business with North Korea".

"It seems (North Korean leader) Kim Jong-un shows no signs of conciliation," said Greg McKenna, chief market strategist at AxiTrader.

North Korea "seems hell bent on either goading the United States, and its president, into a response or what it thinks will be an embarrassing back down."

The latest flare up sent investors fleeing for safe assets, with the yen climbing to 109.73 to the dollar and gold up 0.7% to sit above $1 330. The won sank 0.8% against the dollar.

Dollar pressure

On equity markets Seoul shed 0.7% and Japan's Nikkei ended the morning session 0.9% down as the stronger yen hurt exporters. Hong Kong slipped 0.4% and Sydney shed 0.3%, while Singapore gave up 0.4%.

However, Shanghai wiped out early losses to rise 0.2% in mid-morning trade.

"It's all eyes on dollar-yen this morning, as it's expected this latest NK aggression, could further intensify geopolitical tensions," said Stephen Innes, head of Asia-Pacific trading at OANDA.

"The key now is how the international community will respond given how ineffective the tightened UN sanctions have been at discouraging North Korea's ambitions."

Sunday's test was of a device that could be put on an intercontinental missile that could reach the United States, North Korea claimed.

Adding to pressure on the dollar was a below-expectations read on US jobs creation for August, which raised questions about the chances of a third Federal Reserve interest rate hike before the end of the year.

However, the greenback was holding its own against the euro after a report said the European Central Bank (ECB) could put off a decision on the future of its bond-buying stimulus programme until the end of the year.

The single currency has enjoyed a rally this year as a string of positive data from the eurozone fanned speculation the ECB would soon announce plans to begin scaling back the scheme.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

equities  |  markets  |  asian markets


Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The appointment of Tito Mboweni will:

Previous results · Suggest a vote