Talking Points
- Repercussions from North Korea’s Tuesday missile test continued to reverberate around Asian markets
- Stocks started the session weakly, but most managed to post gains into the close
- The US Dollar lost ground as the Japanese Yen fulfilled its ancient haven role
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Asian stocks managed to rise Wednesday despite rising tensions on the Korean peninsula following North Korea’s latest missile test.
The US conducted firing drills with its South Korean allies in response, leading to some predictable risk aversion as trade got under way. With the US closed for the July 4 break, markets had to operate without a Wall Street lead. Still, the Nikkei 225 managed to finish up 0.3%, with Seoul’s Kospi rising by a little more. The only major index unable to shake off the blues was Australia’s ASX 200 which closed slightly down.
A snapshot of private service-sector activity in China found expansion in June, but at the slowest pace for twelve months. A more solid report from Japan’s service sector saw risk appetite pick up, albeit not for very long.
The US Dollar was generally weaker with the Yen attracting its customary haven bid. The Canadian Dollar held close to ten-month highs against the greenback, still supported by the thesis that its home interest rates could be rising shortly. Crude oil prices were lower, reportedly on signs that OPEC stocks had risen despite its production cut, but they pared their losses as the Asian session went on. Gold prices rose with the geopolitical temperature and were up 0.5% into the Asian close.
The rest of the global session will see Purchasing Managers Index releases from around Europe, along with durable and factory goods orders out of the US and Eurozone retail sales figures. The minutes of the Federal Reserve’s last monetary policy meeting will probably hog the limelight though.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
