Article / 10 August 2017 at 7:00 GMT

Morning Markets: Investors on edge as North Korea-US standoff persists

Consulting editor / TradingFloor




  • Japan: Machinery orders (published)
  • Norway: CPI (0600 GMT)
  • France: Industrial production index (0645 GMT)
  • UK: Index of production (0830 GMT)
  • Greece: Labour force survey (0900 GMT)
  • Ireland: CPI (1000 GMT)
  • Portugal: CPI (1000 GMT)
  • UK: NIESR GDP Estimate (1200 GMT)
  • US: Weekly jobless claims (1230 GMT)
  • US: PPI (1230 GMT)
  • US: EIA weekly natural gas storage report (1430 GMT)

Asia-Pacific equities slipped on Thursday, though fears of a potential conflict between the US and North Korea went off their intense boil after a flare-up in which the two sides exchanged stern warnings. US officials sought on Wednesday to dampen the tensions after president Donald Trump warned North Korea that threats to the US would be met with 'fire and fury' and Pyongyang said it was considering launching a missile at a US airbase on Guam in the Pacific.

The major Asian equity indices were lower, though steadier than on Wednesday, with Japan's Nikkei 225 ending virtually flat, but Hong Kong's Hang Seng lost 1.6% as financial stocks suffered.

Dax futures traded flat into the European open on Thursday.

The Reserve Bank of New Zealand kept its cash rate unchanged at 1.75% and said monetary policy would "remain accommodative for a considerable period" in the face of numerous uncertainties. The kiwi dollar rose after the announcement.

The People's Bank of China strengthened the midpoint of the yuan's trading band to the USD beyond 6.7 for the first time in more than 10 months.

Market signals

Asian session

  • Worries about North Korea had limited initial impact on Asian sentiment
  • However, by late afternoon trade all Asian indices were down slightly
  • Korea's Kospi Composite looked fragile; it was down 0.8% at 0500 GMT
  • Hang Seng was 1.6% lower at the same time, and the Shanghai Comp was down 1%
  • North Korea called Trump's rhetoric 'a load of nonsense' and said he only understood force
  • Japan's core machinery orders fell 1.9% in June; a rise of 3.6% was expected
  • Japan's yearly PPI to June rose 2.6%, above expectations
  • The RBNZ kept rates steady at 1.75%
  • Australia's inflationary expectations fell in August to 4.2% from 4.4% in July
  • Chinese steel futures are trading near a 4-1/2-year high

Forex ahead

  • Geopolitical tensions promoted a flight to safe havens and lifted the Swiss franc
  • HKD has rebounded from its recent slide
  • NZD rose, despite the RBNZ decision to keep rates on hold
  • Fragile Aussie dollar slipped below 0.79 to the USD

From the Floor

Threat. ”The threat of North Korea is still looming out there on the horizon,” says Garnry.

Bullish. "Silver is catching a bid now. Good bullish sentiment across precious metals now," says Hansen.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

The stable trend In GDP growth in the UK will be welcomed at a time of rising uncertainty, due partly to the Brexit talks with the EU, says James Picerno.

Asia dodges flare-up
By the time Asian markets began trading today, much of the fresh bout of geopolitical tension over North Korea had eased, says the team at Saxo Capital Markets Australia.

Yield fears
Fixed-income markets are fraught with fears of increasing yields due to worries that central banks will turn hawkish on inflation, but there's no drastic bond selloff in sight, writes Simon Fasdal.

Rangebound oil
Crude oil has settled into a relatively tight range after a July surge, but the upside remains capped as rising US and Libyan production is likely to offset inventory declines, says Ole Hansen.


 Peaceful, tropical Guam? North Korea has threatened to fire a missile at the US Pacific territory, which is home to several US military bases. Photo: Shutterstock

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