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Haven assets gain in Asia after Trump threatens N Korea

Wednesday 03.10 BST

What you need to know

  • Topix falls as much as 1.4 per cent, Kospi down 1 per cent
  • Yen firmer as won and Australian dollar drop
  • Australian equities solid on financial sector gains
  • Brent falls below $52 a barrel; WTI drops below $49

Overview

Japanese and South Korean equities dropped, havens such as the yen rallied and oil benchmarks retreated further from recent highs on Wednesday in Asia trading. The moves came after US President Donald Trump said North Korea would be “met with fire and fury like the world has never seen” following fresh reports about advances in that country’s missile programme.

Hot topic

Markets in Asia were shaken by the rhetoric out of Pyongyang and Washington, with havens gaining and equities mixed. Wall Street also closed lower on Tuesday.

The yen gained as much as half a per cent on the dollar to ¥109.82, where it continued to hover below the ¥110 mark for the first time since Friday.

That sent stocks in Tokyo lower. The broad Topix index dropped as much as 1.4 per cent, with losses of about 1 per cent or more across all sectors. Information technology, industrials and telecoms stocks were among the worst performers.

Sovereign bonds were mostly gaining amid the moves. Yield, which moves inversely to price, on 10-year US Treasuries was down 1 basis point at 2.248 per cent. That on the equivalent Japanese note fell 1bp to 0.053 per cent.

The 10-year South Korean government bond saw yield rise 3bp to 2.321 per cent, however, as the won shed 0.9 per cent against the greenback to Won1,134.63 per dollar. South Korean equities were also faring badly as Seoul’s Kospi index dropped as much as 1 per cent.

Gold was benefiting from investor unease in the region, up 0.3 per cent at $1,264.94 per ounce.

Equities

Australian equities bucked the regional trend as the benchmark S&P/ASX 200 index rose 0.5 per cent on gains of 0.8 per cent from the financials segment. Commonwealth Bank of Australia was up as much as 1.4 per cent after reporting record cash profit for the financial year ended June, softening some of the blow from recent falls prompted by allegations that the bank violated money laundering laws.

In Hong Kong the Hang Seng was down 0.2 per cent as a 0.6 per cent drop in financials offset gains of more than 1 per cent in both the consumer discretionary and consumer staples segments.

Forex

Currencies were broadly down against the dollar in Asia trading, with the exception of the yen and the renminbi, which firmed 0.2 per cent to Rmb6.6934 per dollar.

The Australian dollar was off 0.7 per cent at A$0.7864 following underwhelming data on consumer confidence and home loan growth.

The dollar index, which measures the greenback against a basket of peers, was basically flat at 93.655.

Commodities

Oil was faring badly in the Asia morning session as Brent crude, the global benchmark, sank 0.5 per cent to $51.87 a barrel. West Texas Intermediate, the US marker, was down 0.4 per cent at $48.96.

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