Hong Kong, China (BBN) – Asian markets traded mixed on Wednesday, but mostly shrugged off North Korea’s latest missile launch.
Wall Street had closed at record levels in the last session, with the Dow Jones industrial average ending 225 points higher, reports, CNBC.com.
NORTH KOREA LAUNCHES NEW MISSILE
North Korea on Wednesday local time launched a likely intercontinental ballistic missile that landed in the Sea of Japan, according to the Pentagon. The launch, the North’s first since Sept. 15, came after the US classified North Korea as a country that supported terrorism on Nov. 20.
Following the launch, President Donald Trump said the US would “take care of” the situation. Japanese Prime Minister Shinzo Abe and Trump have also agreed to increase their cooperation on the North, Reuters said, citing Japanese media.
MARKETS ON THE MOVE
Despite that, most markets in Asia traded higher, following the strong lead from US stocks on tax reform progress and following Federal Reserve Chair nominee Jerome Powell’s Senate testimony.
“The markets seem to be more immune than in the past to North Korea’s missile testing,” Prakash Sakpal, Asia economist at ING, said in a morning note.
Japan’s Nikkei 225 shrugged off the North’s latest missile launch to rise 0.52 percent. Major exporters gained on the dollar’s move higher against the yen. Toyota tacked on 0.13 percent, Sony rose 0.34 percent and Sharp was 0.56 percent higher.
Retail sales in October declined 0.2 percent compared to one year ago, although the figure remained in line with what was forecast in a Reuters poll. That was the first fall in yearly retail sales in a year, Reuters said.
Across the Korean Strait, the benchmark Kospi index reversed early gains to slip 0.13 percent as tech shares declined. Blue-chip heavyweight Samsung Electronics lost 0.84 percent while companies that have been sensitive to developments related to the THAAD anti-missile system traded mixed: Lotte Shopping fell 1.87 percent and LG Household and Healthcare advanced 0.57 percent.
Shares of cosmetics names Amorepacific and Cosmax were up 1.45 percent and 2.85 percent, respectively, following news that China would once again let travel agencies resume selling tour packages to South Korea.
Down Under, the S&P/ASX 200 was 0.66 percent higher, with heavily-weighted financial stocks climbing 0.81 percent. Sector-wise, utilities and retail names traded higher.
Greater China markets came under some pressure. Hong Kong’s Hang Seng Index was off 0.16 percent. On the mainland, the Shanghai Composite shed 0.07 percent and the Shenzhen Composite edged down 0.38 percent.
Meanwhile, MSCI’s broad index of shares in Asia Pacific excluding Japan were little changed, trading just 0.04 percent below the flat line at 10:00 a.m. HK/SIN.
The North’s latest missile launch failed to dent sentiment stateside, with U.S. stocks closing the Tuesday session higher as markets focused on tax reforms. Financials also got a boost following Powell’s comments on regulation.
Major US indexes closed at record highs, with the Dow Jones industrial average rising 1.09 percent, or 255.93 points, to close at 23,836.71.
THE LEAD UP
Stateside, markets turned their attention to tax reform after the Senate Budget Committee approved the Republican tax bill, a crucial step toward a vote in the full chamber later this week. Senate Republicans, who hold 52 seats, can only afford to lose two votes to still pass the bill under special budget rules.
Meanwhile, Federal Reserve chair nominee Jerome Powell indicated the case for a December rate hike was “coming together.” Powell also said he favored “tailoring” regulations on financial institutions, adding that regulation on smaller banks ought to be decreased in intensity.
The dollar extended overnight gains after broadly firming following Powell’s comments, with the dollar index coming off a two-month low touched earlier this week. That index stood at 93.266 at 9:41 a.m. HK/SIN, after trading at the 92.8 handle earlier in the week.
The dollar was firmer against the Japanese currency, with the greenback fetching 111.61, compared to Tuesday’s close of 111.45.
Also of note were reports that a divorce bill between the UK and the European Union had been agreed upon, with newspapers citing a sum around 50 billion euros ($59 billion), according to Reuters.
The pound pared some overnight gains to trade at $1.3356 at 9:45 a.m. HK/SIN after rising as high as $1.3386 from a low of $1.3219 in the last session.
In other news, bitcoin crossed the $10,000 mark early on Wednesday, according to industry site CoinDesk. The cryptocurrency has risen some 900 percent in value year-to-date.
THE COMMODITIES TRADE
Oil prices came under pressure ahead of a Thursday meeting of major oil producers. U.S. West Texas Intermediate shed 0.52 percent to trade at $57.69 per barrel. Brent crude futures declined 0.58 percent to settle at $63.24 per barrel.
WHAT’S ON TAP
The economic calendar for Wednesday is fairly light (all times in HK/SIN):
• 1:00 p.m.: Singapore import, export prices
• Vietnam inflation, industrial production and trade data are also due.