US and Asian shares dip after North Korean missile launch

TOKYO: US and European stock futures and Asian shares dipped slightly on Friday after North Korea fired another missile over Japan on Friday, demonstrating Pyongyang’s defiance against intensifying UN sanctions.
US stock futures fell as much as 0.3 per cent earlier but last stood down just 0.1 per cent while MSCI’s Asia-Pacific share index excluding Japan shed 0.1 per cent, though it was still up 0.7 per cent on the week. Japan’s Nikkei erased earlier gains to end 0.5 per cent higher.
European stock futures dipped slightly, with Euro Stoxx 50 futures down 0.15 per cent.
North Korea fired a missile that flew over Japan’s northern island of Hokkaido far out into the Pacific Ocean, travelling about 3,700 km (2,300 miles), far enough to reach the US Pacific territory of Guam.
Before North Korea’s missile launch, US bond yields had risen while Wall Street shares were mixed after US consumer inflation data rekindled expectations that the Federal Reserve will raise interest rates in December.
The US consumer price index rose 0.4 per cent in August from July, faster than the 0.3 per cent increase forecast by analysts in a Reuters poll.
The so-called core CPI, which excludes volatile energy and food prices, rose 0.2 per cent. On a 12-month basis, it was 1.7 per cent, above the 1.6 per cent forecast by economists.
Following the data, US Fed funds rate futures were pricing in a roughly 45 per cent chance the Fed will raise rates by December, versus around 25 per cent at the start of this week.
The 10-year US Treasuries yield rose to as high as 2.225 per cent, but slipped back to 2.182 per cent in Asia on Friday following North Korea’s missile launch.
In currency markets, the dollar failed to capitalise on the CPI data as the rally it begun at the start of the week ran out of steam. The euro traded at $1.1910, off Thursday’s two-week low of $1.18365.
Instead it was the British pound that stole the limelight after the Bank of England warned it might raise interest rates for the first time in a decade in the “coming months” if the economy and price pressures keep growing.
The pound hit a one-year high of $1.3407 on Thursday and last stood at $1.3388.
Sterling’s overnight index swaps are pricing in about a 50 per cent chance of a rate hike in November.
Oil prices were lower on Friday but largely held the gains that had prices flirting with multi-month highs on Thursday as the clean-up after hurricanes in the United States gathered pace and the outlook for demand took on a firmer tone.
Brent crude futures traded at $55.14 per barrel, down 0.6 per cent on the day but up 2.5 per cent on the week. They hit a five-month high of $55.99 on Thursday.
Elsewhere, bitcoin slipped another 3 per cent after having tumbled 16 per cent on Thursday when Chinese news outlet Yicai reported that China plans to shut down all bitcoin exchanges by the end of September.
BTCChina, one of China’s top three exchanges, said on Thursday that it would stop all trading from September 30. — Reuters