Talking Points
- Most Asian stocks managed gains despite heightened geopolitical worries
- North Korea reportedly launched a series of missiles, some of which entered Japanese waters
- South Korea promised a stronger response to what it called China’s “discrimination” against its companies
Asian shares had a mixed start to the week, with geopolitical risks apparently heightened.
North Korea launched a series of missiles, South Korean military sources reported. Japan said three of them landed in its exclusive economic zone and that it would not tolerate such provocation. South Korea’s trade ministry also reportedly said that it would strengthen its response to recent Chinese discrimination against local companies.
The Nikkei took a hit, falling about 0.5% in the Tokyo afternoon session. South Korean shares fell, too but fought back. It was a better session for Australian stocks, helped by quite strong annualized gains for both retail sales and job advertisements, even if the on-month showings for both were gloomy.
Chinese stocks were slightly higher on the session, as were those in Hong Kong. Investors took the lower Chinese growth target unveiled on Sunday in their stride, as it had been widely expected. Most of the other economic-variable targets announced by Premier Li Keqiang for the year were as expected too.
The US Dollar had a rather torpid Asian session, slipping a little against major traded rivals in what looks like a reaction to last week’s gains. These came in turn on growing certainty that US interest rates will rise this month. Futures markets now put the chance of such a move at close to 80%, with Friday’s labor market data likely to be taken as all-but definitive confirmation unless they are extremely weak.
Crude oil prices drifted lower, with both US and Brent benchmarks down about 0.4%, having risen more than 1% on Friday.
The European and Asian sessions will offer investors two Bank of England speakers (Chief Economist Andy Haldane and Deputy Governor Charlotte Hogg) and final US Durable Goods order data for January
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--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
