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World equities drop after N. Korea’s latest nuclear test

5 September 2017 12:01 am - 0     - {{hitsCtrl.values.hits}}

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AFP: Global stock markets slid yesterday as investors sought safer bets after North Korea claimed to have tested a hydrogen bomb, one week after firing a ballistic missile over Japan.


Pyongyang on Sunday conducted its sixth nuclear test -- sparking further condemnation and a warning from US Defence Secretary Jim Mattis of a “massive military response” if the United States or its allies were attacked.


Asian stock markets slid along with the South Korean won currency, while the haven yen rallied as the news ramped up international tensions. European losses were less acute.


“Fresh North Korean tensions weigh on financial markets as the probability of a serious US military response escalates,” VTB Capital analyst Neil MacKinnon told AFP.


Seoul said later yesterday there were signs the North is preparing another missile launch, adding it could involve an intercontinental ballistic missile similar to the one fired over Japan.


US President Donald Trump stands ready to use the country’s “full range of diplomatic, conventional and nuclear capabilities” if North Korea continues to threaten it or its allies, the White House said Sunday.


Trump denounced the test, tweeting that the time for “appeasement” was over and threatening drastic economic sanctions, including “stopping all trade with any country doing business with North Korea”.
“It seems (North Korean leader) Kim Jong-un shows no signs of conciliation,” said Greg McKenna, chief market strategist at AxiTrader.


North Korea “seems hell-bent on either goading the United States, and its president, into a response or what it thinks will be an embarrassing backdown”, he added.


Provocation
On equity markets Seoul shed 1.2 percent and Japan’s Nikkei ended 0.9-percent down as the stronger yen hurt exporters. Hong Kong slipped 0.8 percent and Sydney closed down 0.4 percent, while Singapore gave up one percent.


“There has been a marked increase in North Korean provocation in recent weeks with a series of missile tests being carried out in what is quite clearly a deliberate escalation of international tensions,” added XTB analyst David Cheetham.


“The latest drill caused a 6.3 magnitude earthquake that shook North Korea following the detonation of the country’s strongest nuclear weapon, which was almost 10 times more powerful than the previous tests.”


Sunday’s test was of a device that could be mounted on an intercontinental missile capable of reaching the United States, North Korea claimed.

“It’s expected this latest North Korea aggression, could further intensify geopolitical tensions,” said Stephen Innes, head of Asia-Pacific trading at OANDA.


“The key now is how the international community will respond given how ineffective the tightened UN sanctions have been at discouraging North 
Korea’s ambitions.”

 

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