Asian shares fell on Tuesday as investors turned to safe-haven assets and US
futures opened lower after North Korea fired a missile.Japan's Nikkei 225 dropped 0.81 percent after a North Korean missile flew
over the country early on Tuesday. Japanese Prime Minister Shinzo Abe said in a
statement that the launch was reckless and unprecedented.
Across the Korean strait, the Kospi tumbled 1.15 percent as investors
processed the latest developments on the peninsula. The broader Kosdaq traded
lower by 0.41 percent.Stocks, including blue chips, across sectors sold off: Samsung Electronics
was down 1.3 percent, LG Electronics tumbled 2.88 percent and Hyundai Motor
declined 0.69 percent. Meanwhile, defense stocks surged on the news, with
Victek soaring 14.1 percent. The Korean won also fell almost 1 percent against
the dollar following the launch.
Down Under, the S&P/ASX 200 declined 0.94 percent, with the financials and
consumer discretionary sub-indexes leading losses.The risk off sentiment also appeared to weigh on greater China markets. The
Hang Seng Index fell 0.77 percent. On the mainland, the Shanghai Composite shed
0.08 percent and the Shenzhen Composite was off by 0.031 percent.
Geopolitical tensions returned to the fore after North Korea launched a
ballistic missile that flew over Japan on Tuesday. The missile headed in the
direction of the Tohoku region before falling in the sea, Japan's NHK said. The
last time a projectile from the hermit state flew over Japan was 2009,
according to Reuters.
"North Korea's firing of more missiles, this time over Japan, could be
the trigger for another round of global risk off," warned ING Asia Head of
Research Rob Carnell in a note.
Demand for traditional safe-haven assets rose following the latest
provocation from North Korea, with demand for gold and the Japanese yen picking
up in the aftermath of the missile launch.
Spot gold prices rose to their highest in almost 10 months on safe-haven
demand. The yellow metal fetched as high as USD 1,322.33 an ounce before paring
some gains to last trade at USD 1,317.83.
Meanwhile, the Japanese currency strengthened to trade as high as 108.32 yen
to the dollar — its strongest levels in about 4 months — compared to levels
around the 108.8 handle seen overnight. The yen later gave up some of those
gains to trade at 108.67 yen to the dollar at 9:32 a.m. HK/SIN.
The yen could have more scope to gain against the dollar, BK Asset
Management Managing Director of FX Strategy Kathy Lien said in an early morning
note. "If Trump responds with more than harsh words for North Korea, we could
see dollar/yen drop as low as 108," wrote Lien.Meanwhile, Dow Jones industrial average futures opened more than 100 points
lower following the North Korea missile news.
Global markets were shaken earlier this month after President Donald Trump
cautioned that the North would be met with "fire and fury" if it
continued to make threats against the U.S. North Korea responded by saying it
was considering a strike on Guam, a US territory, although it later somewhat
backed down.
Elsewhere, energy markets continued to process the impact of Tropical Storm
Harvey, a downgraded former hurricane. US gasoline futures were up 1.15 percent
at USD 1.7320 a gallon at 9:42 a.m. HK/SIN. Gasoline futures had settled up
around 3 percent the previous session after refineries in the Houston area were
shut down.
Also on the energy front, Brent crude futures rose 0.29 percent to trade at
USD 52.04 a barrel and U.S. futures tacked on 0.47 percent to trade at USD
46.79. US crude had settled more than 2 percent lower overnight on concerns
that refinery closures would affect crude demand.Stateside, oil refinery stocks rose as investors digested the aftermath of
Harvey, with the Dow Jones industrial average edging down 0.02 percent, or 5.27
points, to close at 21,808.4.In currencies, the dollar index, which tracks the greenback against a basket
of currencies, was mostly flat at 92.230 at 9:33 a.m. HK/SIN. The dollar
slipped below the 93 handle last week following a central banking meeting at
Jackson Hole.
In corporate news, Western Digital said it would foot about 150 billion yen
(USD 1.37 billion) of an approximately 2 trillion yen bid for Toshiba's memory
unit, Nikkei Asian Review reported. Western Digital is part of a consortium
that also includes Innovation Network Corp of Japan.
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