Talking Points:
- Asian stocks were broadly lower as Friday drew to a close
- North Korea’s foreign minister reportedly said that the country could consider an offshore hydrogen bomb test
- S&P cut Hong Kong’s credit ratings just days after trimming China
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Asian stocks wilted Friday as North Korea re-emerged at the forefront of investor concerns
The rogue nation’s foreign minister was reported as saying President Kim Jong Un could consider the testing of a hydrogen bomb over the Pacific. The report came as US President Donald Trump signed an executive order tightening financial sanctions on Pyongyang, and after he thanked China for complying in this sphere.
Away from the Korean peninsula China criticized Standard & Poor’s Thursday decision to cut its sovereign credit ratings. The agency cited rising debt levels but China called the move a “wrong decision,” although it merely brings S&P into line with other rating heavyweights, Moody’s and Fitch. S&P cut Hong Kong’s rating Friday, taking the territory down to AA+ from AAA.
The Nikkei 225 ended down 0.25%, with most other bourses lower. Australian stocks bucked the trend, up 0.4% as the heavily weighted financial sector continued to gain. Chinese equity lost ground as those S&P downgrades weighed.
The US Dollar slipped against the Japanese Yen as geopolitics trumped risk appetite. There was little obvious reaction to wire reports suggesting that Japan will indeed have a snap election on October 22, as earlier speculated. The New Zealand Dollar slipped a little, too on the day before that county heads to the polls after an extremely tight electoral race.
Gold prices inched up as the North Korean story stoked haven demand. Crude oil prices were steady- investors awaited news from a meeting of the Organization of Petroleum Exporting countries in Vienna later in the day. Nymex US crude held above $50/barrel.
The Asian session may be winding down by there’s plenty of life left in global markets’ Friday. French Gross Domestic Product numbers are coming up, along with Purchasing Managers Index data from Germany and the Eurozone. European Central Bank President Mario Draghi will speak in Dublin. US PMIs are coming up too, as is news of Canadian consumer price inflation.
UK Prime Minister Theresa May is set to make a major speech in Italy detailing her Brexit strategy.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
