The headquarters of the Asian Infrastructure Investment Bank in Beijing, China. Picture: REUTERS
The headquarters of the Asian Infrastructure Investment Bank in Beijing, China. Picture: REUTERS

Tokyo — US stock futures and Asian shares dipped after North Korea fired another missile over Japan into the Pacific Ocean on Friday, demonstrating Pyongyang’s defiance in the face of intensifying sanctions.

US stock futures fell 0.2% while MSCI’s Asia-Pacific share index excluding Japan shed 0.4%, though it was still up 0.4% on the week.

Japan’s Nikkei ticked up 0.1%. Japan said the North Korean missile fell into sea about 2,000km east of Hokkaido.

The launch came just days after the UN Security Council approved new sanctions against Pyongyang for its September 3 nuclear test, but markets are growing accustomed to North Korea’s sabre-rattling.

"There have been reports suggesting North Korea is preparing a missile launch, so this was by no means a surprise," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

"Also, in the past, markets have stabilised within a few days after a North Korean missile launch. So in a way this seems like something markets have already experienced before, thus producing a limited reaction," he added.

Before North Korea’s missile launch, US bond yields had risen while Wall Street shares were mixed after US consumer inflation data rekindled the expectation that the Federal Reserve will raise interest rates in December.

The consumer price index (CPI) rose 0.4% in August from July, faster than the 0.3% increase forecast by analysts in a Reuters poll.

The so-called core CPI, which excludes volatile energy and food prices, rose 0.2%. On a 12-month basis, it was 1.7%, above the 1.6% forecast by economists.

Following the data, the US Fed funds rate futures were pricing in a roughly 45% chance the Fed will raise rates by December, compared with about 25% at the start of this week.

The 10-year US treasuries yield rose to as high as 2.225%, but slipped back to 2.178% in Asia on Friday following North Korea’s missile launch.

In currency markets, the dollar failed to capitalise on the CPI data as the rally it begun at the start of the week ran out of steam.

The euro traded at $1.1910, off Thursday’s two-week low of $1.18365.

The British pound held firm after the Bank of England (BoE) warned it might raise interest rates for the first time in a decade in the "coming months" if the economy and price pressures kept growing.

The pound hit a one-year high of $1.3407 on Thursday and last stood at $1.3388.

Oil prices were lower on Friday but largely held gains that had prices flirting with multi-month highs, as the cleanup after hurricanes in the US gathered pace and the outlook for demand took on a firmer tone.

Brent crude futures traded at $55.14 a barrel, down 0.6% on the day but up 2.5% on the week. They hit a five-month high of $55.99 on Thursday.

Elsewhere, bitcoin bounced back 5% after having tumbled 16% the previous day as Chinese news outlet Yicai reported that the country planned to shut down all bitcoin exchanges by the end of September.

BTCChina, one of China’s top three exchanges, said on Thursday that it would stop all trading from September 30.


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