On Monday, most of the Asian shares fell, as fears escalated about risks to regional stability after North Korea conducted its sixth and most powerful nuclear weapons test over the weekend, which, according to Pyongyang, was a hydrogen bomb capable of fitting into and ICBM.
Japan’s benchmark Nikkei edged down, losing 0.9% to 19,521.44 in morning trading. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.4% with South Korea’s main index down 0.6%.
Australia’s S&P/ASX 200 lost 0.5% to 5,697.80. South Korea’s Kospi down 0.7% to 2,340.55. Hong Kong’s Hang Seng fell 0.4% to 27,833.5, but the Shanghai Composite was little changed, jumping less than 0.1% to 3,368.52.
Investors are weighing the U.S. response to the North Korea’s testing of a hydrogen bomb.
President Donald Trump’s administration has previously warned that the U.S. will release a “massive military response” if North Korea threatens its territory or allies.
“Any threat to the United States or its territories, including Guam or our allies will be met with a massive military response, a response both effective and overwhelming,” U.S. Defense Secretary, Jim Mattis, said. Investors are watching over a U.N. Security Council meeting later on Monday for a new set of sanctions on Pyongyang and a possible stricter standpoint by former ally China.
President Trump threatened to stop all trade with countries that have a business with the North, an indirect warning to China, and criticized South Korea for its “talk of appeasement.”
“Like a bad horror movie, the North Korea saga intersperses moments of calm, with occasional action to jolt you out of your chair,” said ING’s head of the Asian research firm, Rob Carnell.
“Unless this is the precursor to U.S. military action, which we doubt, then in a little over a day or two, tension will calm again, making this a good buying opportunity for investors with a strong enough nerve.”
Last week, U.S. stocks closed higher as weaker-than-expected jobs report on Friday did little to lessen investor rate-hike expectations in the wake of recent data showing that the U.S. economy remained on track for solid growth in the third quarter.
The Dow Jones Industrial Average closed lower at 21,987. The S&P 500 rose 4.90 points, or 0.20%, to 2,476.55 while the Nasdaq Composite closed at 6,435, up 0.10%. It was the best week for the Nasdaq as technology and health care companies surged. The three main U.S. indices reported a monthly gain in August.
The Labor Department said U.S. employers created 156,000 jobs in August, missing consensus estimates for the creation of 180,000 jobs. Investors were pleased that the economy kept growing at a steady pace while inflation remains weak.
The Institute for Supply Management said its manufacturing index in August jumped to 58.8% from 56.3% in July. That is the highest reading since April 2011.
The dollar fell to 109.79 yen from 110.04 yen late Friday. The euro dipped $1.1883 from $1.1907.
Copper climbed 1% on Monday to hit its highest in three years.
In the oil market, prices were mixed as stoppage of U.S. production following Hurricane Harvey were balanced by an expected downturn in crude demand as the storm knocked out refineries along the Gulf of Mexico.
Brent crude eased 29c to $52.46, while U.S. crude increased 14c to $47.43 a barrel.
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