Stocks in Asia dip as haven rally triggered by North Korea tensions subsides

Pedestrians walk past a stock quotation board flashing the Nikkei 225 key index of the Tokyo Stock Exchange in front of a securities company in Tokyo, on Aug 9, 2017. PHOTO: AFP

SYDNEY (BLOOMBERG) - Financial markets showed signs of stabilizing on Tuesday (Sept 26) after a fresh trigger from North Korea had sent money into haven assets, with focus returning to comments from central bank policy makers.

Equities in Asia began Tuesday mixed as gains in gold and the yen petered out. North Korea had injected a note of caution to markets on Monday after its foreign minister declared that the nation can shoot down US warplanes. Focus remains on Chinese property developers, as one of the world's most extreme stock rallies gets a reality check.

North Korean Foreign Minister Ri Yong Ho described President Donald Trump's recent comments as tantamount to a declaration of war. The White House denied it has declared war on Pyongyang, while China's ambassador to the UN told Reuters the situation is "getting too dangerous."

"This does represent a significant escalation in rhetoric and raises the risk of a tactical misstep," said Tapas Strickland, a Sydney-based economist at National Australia Bank Ltd.

Japan's Topix index was slightly lower as of 9:21am in Tokyo. South Korea's Kospi index fell 0.3 per cent and Australia's S&P/ASX 200 Index added 0.1 per cent.

Hong Kong's Hang Seng Index futures were down 0.4 per cent.

Futures on the S&P 500 Index were little changed. The underlying gauge fell 0.2 per cent, while the Nasdaq Composite Index lost 0.9 per cent following a selloff in technology stocks.

The Bloomberg Dollar Spot Index was steady after climbing 0.4 per cent to the highest in more than three weeks. The yen was little changed at 111.66. It gained 0.2 per cent on Monday. The won fell 0.3 per cent to 1,135.65 per dollar.

The euro was at US$1.1854 after falling 0.9 per cent.

Gold fell 0.1 per cent to US$1,308.96 an ounce, after rising 1 per cent on Monday.

West Texas Intermediate crude edged lower to US$52.11 a barrel after jumping 3.1 per cent on Monday.

A speech by Federal Reserve Chair Janet Yellen on Tuesday will be parsed as policy makers continue to disagree on whether to raise US interest rates again this year. New York Fed President William Dudley argued the US central bank should stick with its strategy of gradual monetary policy tightening, a view echoed by Yellen. Meanwhile, Chicago Fed President Charles Evans urged caution as did Minneapolis Fed President Neel Kashkari. Investors see a roughly 60 per cent chance that rates will be increased again in December following moves in March and June.

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