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Investors shrug off latest N Korea missile launch

Friday 03.00 BST

What you need to know

  • Yen, gold gain after North Korea missile launch
  • Asia Pacific stocks broadly lower after weaker lead from Wall Street
  • Crude oil pulls back from Thursday highs

Overview

Market reaction to North Korea’s latest missile test was muted on Friday, with investors largely shrugging off news that a rocket launch by Pyongyang had once again overflown Japan.

Hot topic

Japan’s yen was 0.1 per cent firmer at ¥110.05 in Asia trading, having briefly strengthened as much as 0.6 per cent to ¥109.56 immediately following the launch. Gold firmed 0.2 per cent as well to $1,331.40 per ounce.

The moves, which followed word that North Korea had launched what appeared to be an intermediate-range ballistic missile that flew over Japan’s northern island of Hokkaido before landing in the Pacific Ocean, were relatively minor compared with those that followed earlier rounds of weapons testing by North Korea.

US officials had expected North Korea to retaliate after the UN passed a new package of sanctions targeting the reclusive nation, which, combined with an earlier round in August, mean that 90 per cent of North Korean exports are now under sanctions.

Equities

Stock markets in the region were broadly lower after a weaker lead-in from Wall Street. The S&P 500 closed on Thursday down 0.1 per cent, ending a three-day streak of gains that had brought the benchmark just short of the 2,500-point mark.

Japanese stocks recovered from an initial dip to trade higher on Friday morning, with Tokyo’s Topix index up 0.1 per cent after opening 0.2 per cent lower.

South Korea’s Kospi index slipped 0.5 per cent, while Australia’s S&P/ASX was down 0.4 per cent. Shares in Fortescue fell 3.1 per cent after the miner announced its chief executive Nev Power was stepping down.

In Hong Kong the Hang Seng was off 0.8 per cent as the financial sector dipped 1.1 per cent.

Forex and fixed income

Currency market moves were relatively muted despite the latest ratcheting up of geopolitical tensions in the region. The Australian dollar was the biggest mover, down 0.2 per cent at $0.7994.

The dollar index measuring the greenback against a basket of peers was flat at 92.114. Yields, which move inversely to price, on the 10-year US Treasury were likewise flat at 2.183 per cent.

Commodities

Crude oil was pulling back from Thursday’s highs reached on mounting optimism about demand. Brent crude, the global benchmark, was off 0.6 per cent at $55.15 a barrel. West Texas Intermediate, the US marker, fell 0.4 per cent to $49.68.

Gold was up following news of the latest missile launch by North Korea, climbing 0.2 per cent to $1,331.40 per ounce.

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