Seoul, Tokyo slip and yen rallies after N. Korea missile test
HONG KONG: Stocks in Seoul and Tokyo fell yesterday and the safe-haven yen advanced after North Korea fired four missiles – three of them landing in Japanese waters – fuelling fresh geopolitical concerns.
But Asia’s other markets started the week with gains after another positive lead from Wall Street and remarks by Federal Reserve boss Janet Yellen that US interest rates would more than likely be hiked this month as the economy continues to improve.
Japanese Prime Minister Shinzo Abe warned the threat from North Korea had ‘entered a new stage’ following the missile launch, which came after Pyongyang fired a rocket last month.
“Investors seem to be reacting to the North Korean missile launch,” Hiroaki Hiwada, a strategist at Toyo Securities, told Bloomberg News.
“The yen’s strengthening, and investors are staying away from trades as geopolitical risk increases. I do think this is a temporary situation as we’ve seen in the past, but with this many missiles being launched there’s heightened tension.”
Tokyo’s Nikkei index ended the morning session 0.5 per cent lower, while Seoul was 0.2 per cent down.
Japanese exporters were also hurt by a stronger yen as investors rushed into the unit, which is considered a safe bet in times of uncertainty and turmoil.
The greenback bought 113.80 yen from 114.05 yen in New York, where it had already suffered selling on profit-taking.
The US unit sank after Yellen told a Chicago business group that lifting interest rates ‘would likely be appropriate’ if employment and inf lation trends stay solid.
Her remarks followed similar comments by other top Fed officials over the week that left traders all but certain of a hike at the bank’s March 14-15 policy meeting.
“Janet Yellen seemed to confirm that rates will be rising this month, and more than once this year,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a note.
“But it seems that stocks and US dollar traders were a little nonplussed with her statement,” he said, adding: “All she did was reinforce what the market had come to believe over the course of the week.”
Hong Kong stocks rose 0.4 per cent and Shanghai was 0.3 per cent higher, while Sydney gained 0.2 per cent and Taipei put on 0.3 per cent.
China’s Premier Li Keqiang on Sunday set a target of “around 6.5 per cent” economic growth this year, lower than the 6.7 per cent seen in 2016, which was the slowest pace for more than a quarter of a century.
McKenna added that figure was “still quite an optimistic target given the headwinds the Chinese economy faces with housing and credit” but said “I expect the government to pull out all stops” to hit it. — AFP