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PIG TODAY-Asian markets pull back as concern over North Korea mounts

Asian stocks started lower in holiday-affected trading amid weakness in overseas markets and persisting geopolitical uncertainty, particularly involving the Korean Peninsula.

Most markets in the world will be closed in observance of Good Friday, but there is some activity, including in Japan and China.

In Japan, much of this week’s activity has been to the downside. That continued Friday, with the Nikkei Stock Average NIK, -0.31%  down 0.3% even as the yen has steadied versus the dollar. Persistent gains for the Japanese currency have sent the country’s benchmark stock index to four-month lows this week.

But the dollar regained some ground overnight, a day after President Donald Trump said the currency “is getting too strong.” That sent the greenback to a five-month low of ¥108.73, but it was recently around ¥109.20.

Stock declines are even bigger in the region, with South Korea’s Kospi SEU, -0.52%   down 0.5%, and China’s Shenzhen Composite 399106, -0.73%   and Taiwan’s Taiex Y9999, -0.85%   both sliding 0.9%. They followed the Dow industrials and S&P 500, which both hit two-month closing lows on Thursday.

Concerns have been growing about potential action by North Korea and the U.S. North Korean state media has warned that the government could use its national holiday on Saturday — the birthday of the country’s founder, Kim Il Sung — to deliver a show of force.

Meanwhile, Chinese stocks fell as speculative funds are rumored to be withdrawing from small caps, triggering broader selloff worries amid tightening regulatory pressure. A number of stocks fell by the 10% daily limit in early trading, prompting the chatter about fund activity.

Caution also continued over U.S. trade relations with Asian economies ahead of Vice President Mike Pence’s scheduled visit to the region next week. In Japan, he is scheduled to meet his counterpart, Deputy Prime Minister Taro Aso, to discuss economic issues.

Hideyuki Ishiguro, senior strategist at Daiwa Securities, said the U.S. administration appears to be trying to score more points in foreign policy as Trump struggles to achieve much on domestic issues.

“I suspect talks will go smoothly but can’t rule out the possibility of some troubles emerging,” Ishiguro said.

In fixed income, the yield on the 10-year Japanese government bond rose to 0.03% from Thursday’s close of 0.02% after hitting a five-month low of 0.005% earlier Thursday.

The highest probability is that this is going to end very badly for all sides.

Hence the markets are much too complacent about this crisis.

Source: efxnews.com

Asian stocks started lower in holiday-affected trading amid weakness in overseas markets and persisting geopolitical uncertainty, particularly involving the Korean Peninsula.

Most markets in the world will be closed in observance of Good Friday, but there is some activity, including in Japan and China.

In Japan, much of this week’s activity has been to the downside. That continued Friday, with the Nikkei Stock Average NIK, -0.31%  down 0.3% even as the yen has steadied versus the dollar. Persistent gains for the Japanese currency have sent the country’s benchmark stock index to four-month lows this week.

But the dollar regained some ground overnight, a day after President Donald Trump said the currency “is getting too strong.” That sent the greenback to a five-month low of ¥108.73, but it was recently around ¥109.20.

Stock declines are even bigger in the region, with South Korea’s Kospi SEU, -0.52%   down 0.5%, and China’s Shenzhen Composite 399106, -0.73%   and Taiwan’s Taiex Y9999, -0.85%   both sliding 0.9%. They followed the Dow industrials and S&P 500, which both hit two-month closing lows on Thursday.

Concerns have been growing about potential action by North Korea and the U.S. North Korean state media has warned that the government could use its national holiday on Saturday — the birthday of the country’s founder, Kim Il Sung — to deliver a show of force.

Meanwhile, Chinese stocks fell as speculative funds are rumored to be withdrawing from small caps, triggering broader selloff worries amid tightening regulatory pressure. A number of stocks fell by the 10% daily limit in early trading, prompting the chatter about fund activity.

Caution also continued over U.S. trade relations with Asian economies ahead of Vice President Mike Pence’s scheduled visit to the region next week. In Japan, he is scheduled to meet his counterpart, Deputy Prime Minister Taro Aso, to discuss economic issues.

Hideyuki Ishiguro, senior strategist at Daiwa Securities, said the U.S. administration appears to be trying to score more points in foreign policy as Trump struggles to achieve much on domestic issues.

“I suspect talks will go smoothly but can’t rule out the possibility of some troubles emerging,” Ishiguro said.

In fixed income, the yield on the 10-year Japanese government bond rose to 0.03% from Thursday’s close of 0.02% after hitting a five-month low of 0.005% earlier Thursday.

The highest probability is that this is going to end very badly for all sides.

Hence the markets are much too complacent about this crisis.

Source: efxnews.com

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