The yen jumped and S&P 500 Index futures declined in early Asia trading after North Korea launched another missile over Japan on Friday morning in a fresh provocation after harsher UN sanctions against Kim Jong Un’s regime.
Tensions had already resurfaced on Thursday when the Nikkei reported that Pyongyang was preparing another missile launch. Japanese equity-index futures declined. The greenback reversed gains to weaken versus most major peers. The pound maintained gains after surging as the Bank of England signaled the possibility of stimulus reduction. U.S. inflation quickened, supporting an uptick in expectations for an increase in borrowing costs this year. Bitcoin slumped after one of China’s largest online exchanges said it would stop handling trades by the end of the month amid a government crackdown on cryptocurrencies.
Geopolitics will once again preoccupy investors who had largely focused on a raft of economic data out of the U.S. and China ahead of the Federal Reserve policy meeting next week. Thursday’s U.S. economic data lent support to those expecting a further run up in U.S. bond yields as inflation topped estimates and traders increased bets on another rate hike in 2017. While China data this week softened, the signals emanating from financial markets remain decidedly bullish.
Japan didn’t attempt to shoot down the unidentified missile, which was launched at 6:57 a.m. and flew over the northern island of Hokkaido before landing 2,000 kilometers (1,200 miles) away in the Pacific Ocean, according to Japanese broadcaster NHK. Yoshihide Suga, Japan’s government spokesman, told reporters that the situation was similar to that when a missile was fired over Japan on Aug. 29, NHK reported.
Terminal subscribers can read more in our Markets Live blog.
Still to come this week:
- U.S. retail sales and industrial production data are due Friday.
Here are the main moves in markets:
- Futures on the S&P 500 Index lost 0.3 percent as of 8:03 a.m. in Tokyo. The underlying gauge closed 0.1 percent lower on Thursday.
- Futures on Japan’s Nikkei 225 Stock Average fell 0.4 percent in Chicago trading. Contracts on South Korea’s Kospi index declined, while those on Australia’s S&P/ASX 200 Index rose. Hong Kong’s Hang Seng Index contract was flat.
- The Bloomberg Dollar Spot Index fell 0.2 percent, extending a 0.3 percent drop on Thursday.
- The yen gained as much as 0.6 percent and was trading 0.2 percent higher at 110.01 per dollar.
- The British pound was little changed after gaining 1.4 percent to $1.3399.
- The yield on 10-year Treasuries closed little changed at 2.19 percent on Thursday.
- West Texas Intermediate crude slipped 0.3 percent to $49.75 a barrel after gaining 1.2 percent on Thursday and rising above $50 a barrel.
- Gold rose 0.3 percent to $1,333.05 an ounce.