Asian Markets Fall After North Korea Nuclear Test
Asian shares moved lower after North Korea conducted a fifth nuclear test Friday, adding to weakness in the market brought on by disappointment about European Central Bank’s inaction on stimulus.
But Hong Kong’s Hang Seng Index continues to rally, gaining today after a Chinese regulator said it would allow domestic insurers to invest in Hong Kong-listed stocks through a trading link with Shanghai. The China Insurance Regulatory Commission’s announcement came less than a month after the unveiling of the Shenzhen-Hong Kong Stock Connect program, set to begin later this year.
The Shanghai Composite has been little changed today.
A magnitude 5.3 earthquake was detected near North Korea’s nuclear test site in the country’s northeast early Friday, the U.S. Geological Survey said. “Possible explosion, located near the location where North Korea has detonated nuclear explosions in the past,” the service said.
The South Korean won fell amid headlines about the nuclear test, dropping to 1,103.0 to the U.S. dollar, a 0.9% decline from Thursday’s closing level of 1,092.6. It has rebounded some and was recently trading at 1098.23.
The South Korea’s Kospi slid 1.3% and Australia’s S&P/ASX 200 was down 0.8%.
Meanwhile Japan’s Nikkei Stock Average, which opened higher, has dropped down 0.3% as the yen appreciated against the U.S. dollar in Asian trading following overnight declines. A stronger yen makes Japanese exporters less competitive.
The North Korean test came as Asian stock markets had a weaker tone to start the day after broad declines in Europe and the U.S. amid disappointment the ECB left its €1.7 trillion ($1.9 trillion) stimulus effort unchanged.
Analysts said markets had run up on expectations the ECB will end up buying equities as bond supplies evaporate. But Thursday’s decision has fed into views that central banks globally are pausing to rethink their aggressive market-boosting measures.
The U.S. Federal Reserve and the Bank of Japan’s next policy meetings wrap on Sept. 21.
Meanwhile, the Bank of Korea kept its base rate unchanged for a third straight month on Friday and the latest data from China showed consumer inflation slowed in August. India is scheduled to issue data on industrial production later Friday.
Source: WSJ – Asian Markets Fall After North Korea Nuclear Test
