Talking Points
- Asian stocks mostly fell Wednesday as both North Kora and the US sounded more warlike
- The Australian stock market was the most notable trend bucker
- A stronger Yen weighed on the Nikkei 225 as it tends to do
Check out the Asia/Pacific currency outlook into 2017’s final quarter with the DailyFX forecasts
Stocks found the going tough Wednesday as warlike rhetoric ratcheted up between North Korea and the United States.
The former said that it was “carefully examining” plans for a missile strike on the US Pacific territory of Guam shortly after President Donald Trump said that any threat from the rogue state would be met with “fire and fury.” US intelligence also reportedly said that North Korea was now capable of making a nuclear warhead which could fit its known ballistic weapons.
This bellicose talk pinioned market attention and saw most Asian bourses lower, just as it had sparked a late selloff on Wall Street Tuesday, albeit in some cases from new record highs. The Nikkei 225 shed 1.3%, with Hong Kong and Shanghai lower. The ASX in Sydney bucked the trend, being geographically further away from the Korean peninsula and also boosted by news of local bank earnings. It was up 0.4%. However, it is worth pointing out that the likes of the Nikkei do look set to end some way above their session lows.
In currency markets haven bids lifted the Japanese Yen to eight-week highs against the US Dollar, with the South Korean won sinking only to recover somewhat. Monday’s local economic data tended to weigh on the Australian Dollar with both home loans and, especially, consumer confidence underwhelming. Chinese inflation data had little to offer coming in just a whisker under market expectations both at the consumer level and at the factory gate.
Crude oil prices slipped by about 20 cents per barrel for both the US benchmark and international Brent. Hoary themes remain in play as investors still doubt that traditional producers will be able to meaningfully reduce supply despite some evidence of US inventory drawdown. Gold prices made gains as investors shrank from risk.
The rest of the global day will offer news of US mortgage applications, Canadian building permits and more, weekly crude-oil inventory levels.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
