Safe Havens Maintain Gains as Korea Threats Linger: Markets Wrap
published Sep 4, 2017 5:37:51 PM, by Andreea Papuc
Gold and the yen maintained gains in early Asian trading as the United Nations Security Council met to discuss the threat from North Korea.
S&P 500 Index futures were little changed, with the cash market closed on Monday for Labor Day, while contracts on Japanese equities were slightly higher. The Stoxx Europe 600 Index declined after a report that Pyongyang is preparing to launch an intercontinental ballistic missile as a follow-up to Sunday’s nuclear test. The yen and Swiss franc led currency gains on Monday. Gold rose to an 11-month high. Gasoline gave up some of last month’s gains as U.S. Gulf Coast refineries plan to resume operations following Hurricane Harvey-triggered shutdowns.
North Korea was “begging for war” by testing a nuclear weapon over the weekend, the U.S. ambassador to the UN said. Nikki Haley demanded the strongest sanctions possible to bring the Kim Jong Un regime to heel. Losses on Asian equities deepened on Monday and safe havens advanced after South Korea said it detected preparations by North Korea for a possible ICBM launch.
“Expect some short-term risk-aversion trades,” Citigroup Inc. economists led by Johanna Chua wrote in a client note. “But such market moves tend to be short-lived, as typically tensions defuse quickly. So unless the global response to this test raises the probability of a military strike or North Korean regime collapse (both unlikely), this time may play out similarly.”
Elsewhere, bitcoin tumbled the most since July after China’s central bank said initial coin offerings are illegal and asked all related fundraising activity to be halted immediately.
Among key events coming this week: The Reserve Bank of Australia holds it monetary policy meeting Tuesday. Expectations are for the central bank to hold rates. Governor Philip Lowe speaks this evening. Caixin’s China services PMI is due Tuesday as well as Australia’s second-quarter current-account balance. Among other economic numbers out of China this week, trade figures are anticipated to show another month of solid export growth, while FX reserves probably continued to rise on stricter capital controls, robust growth and a stronger yuan, according to Bloomberg Intelligence. Federal Reserve Board member Lael Brainard speaks on the economic outlook and monetary policy on Tuesday, which may help set the tone for the Fed’s Sept. 20 policy decision. Among other Fed speakers this week, New York Fed President Bill Dudley, and Dallas Fed President Robert Kaplan. The European Central Bank meets on Thursday. President Mario Draghi will express concern over the euro’s strength when the ECB meets this week, but won’t say much about his asset-purchase program’s future, according to a survey.
And here are the main moves in markets:
Contracts on the Nikkei 225 Stock Average rose 0.1 percent as of 7:07 a.m. Tokyo time. Futures on the S&P 500 Index were little changed. The Stoxx Europe 600 Index sank 0.5 percent. The MSCI All-Country World Index retreated 0.2 percent Monday. The MSCI Asia Pacific Index declined 0.6 percent, the biggest drop since Aug. 11.
The Bloomberg Dollar Spot Index was little changed. The euro was little changed at $1.1898 after advancing 0.3 percent Monday. The Japanese yen held onto gains at 109.68 per dollar after jumping 0.5 percent on Monday. The Swiss franc was steady at 0.9579 per dollar after climbing 0.7 percent.
Germany’s 10-year yield declined about one basis point to 0.37 percent.
Gold was trading at $1,333.74 an ounce, little changed after a 0.6 percent gain. West Texas Intermediate crude climbed 0.3 percent to $47.41 a barrel.
–With assistance from Robert Brand.To contact the reporter on this story: Andreea Papuc in Sydney at email@example.com To contact the editor responsible for this story: Christopher Anstey at firstname.lastname@example.org
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