Korean war fears spark selling spree across Asia

ASIAN stocks were a sea of red yesterday as investors panicked over the threat of war with North Korea.

The arrival of a US carrier group off the coast of the Korean peninsula sent traders running for the hills, pushing up the value of the Japanese yen – traditionally seen as a safe haven in times of strife.

Earlier this week, it broke below ¥110 to the dollar for the first time since November. Stocks in Tokyo were hit by conflict fears and the stronger currency, sending the Nikkei index down 0.5pc to a five-month low.

The Hang Seng index in Hong Kong dropped 0.2pc, the Shanghai Composite fell 0.9pc and South Korean shares slid 0.6pc.

There are concerns the situation might escalate today as North Korea celebrates the birthday of its first communist dictator, which may be marked by a nuclear weapons test.

Shane Oliver, chief economist at investment firm AMP Capital, said: ‘Geopolitics seemed to dominate over the past week with the ramifications of the US missile strike on Syria still reverberating and tensions around North Korea steadily building. The issues around Syria are likely to settle down assuming US involvement does not escalate, but North Korea is more risky.’

The latest gyrations on stock markets in Asia came after Donald Trump this week spooked the currency markets with a warning that the dollar was ‘too strong’.