Yen, bonds and gold gain on North Korea nuclear test, missile report

SYDNEY: The Japanese yen, gold and sovereign ties have risen on Monday as the latest North Korean nuclear test, and reports that Pyongyang was preparing for another missile launch, causing the usual knee shift to safer ports.

The dollar was down to 109.57 yen, having been as low as 109.22 and out of all yen late Friday. Japan is the world’s largest creditor and traders tend to assume that Japanese investors would repatriate funds in the event of a crisis, thus pushing the yen. Many wonder, however, whether Japanese assets would really be favorable if a real war broke out in Asia.

Japan’s Nikkei failed to lose 0.9%. The broader index of MSCI Asia Pacific shares outside Japan fell 0.75% with South Korea’s top index 1%.

“As a bad horror movie, the North Korean saga crosses moments of calm, with occasional steps to shake you,” said Rob Cravel, director of ING Asian Research.

“But now we are here many times, many times,” he added. “Unless it is the forerunner of US military action, which we doubt, then in a little over a day, tensions will subside, making it a good buying opportunity for investors with fairly strong nerve.”

European stock markets appeared to be lower with the Eurostoxx 50 and FTSE futures with a decline of 0.4% and the DAX contract declined by 0.6%. North Korea dominated Sunday’s sixth and most powerful nuclear test, which it said was an advanced hydrogen bomb, a range missile that threatened a “massive” US military response if it threatened its allies or its allies.

Speaking outside the White House after meeting with President Donald Trump and his national security team, US Defense Secretary Jim Mattis said Trump asked to be briefed on all available military options.

On Monday, the Yonhap news agency reported that North Korea was preparing another ballistic missile launch, possibly the ICBM class. US 10-year Treasury bills rose 7 ticks, while 10-year Japanese government bond yields rose to their lowest level since last November.

E-Mini futures for the S & P 500 declined 0.4%, although US markets are closed on Labor Day Monday. The dollar fell 0.9591 Swiss francs at 0.9646 and decreased 0.25% against a basket of currencies at 92,583. Gold rose to a 10-month high and rose 0.9% to $ 1,337.14.

The euro was 0.3 percent stronger at $ 1.1898, though investors were late before a meeting of the European Central Bank on Thursday. Some reports to the ECB are dissatisfied with the strength of the euro and are in no hurry to signal the start of a decline in its huge balance sheet.

Wall Street ended last week on a slightly positive note after a lukewarm US employment report kept expectations of silence for yet another interest rate hike this year. The Dow Jones ended Friday with a gain of 0.18 percent, while the S & P 500 added 0.20 percent and Nasdaq 0.1 percent. [.N]

US job growth slowed more than expected in August after two consecutive months of sharp increases. The non-farm wage bill rose 156,000 last month, while economists had forecast an increase of 180,000. On a brighter note, the Institute of Supply Management reported that its Labor Force activity index rose to 58.8 in August, the highest reading since April 2011.

It was the last sign that the growth of the world-wide plant gained strength and was added to the increase of the industrial metals. Copper rose 1 percent on Monday to reach its high in three years. In the oil market, prices were moderate as US output closures following Hurricane Harvey were offset by an expected slowing of gross demand as the storm drowned refineries along the Gulf of Mexico .

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