Risk Wobbles on North Korea Headlines

Australian shares jumped Tuesday as the central bank kept rates unchanged and signaled they wouldn’t rise soon, while other Asian shares retreated ahead of a U.S. trading holiday and uncertainty over North Korea’s latest missile launch.

KEEPING SCORE: Australia’s S&P/ASX surged 1.7 percent to 5,778.60 while Japan’s benchmark Nikkei 225 index shed 0.3 percent to 19,999.43. South Korea’s Kospi declined 0.6 percent to 2,379.03 and Hong Kong’s Hang Seng slumped 1.5 percent to 25,389.30. The Shanghai Composite Index lost 0.5 percent to 3,178.21. Benchmarks in Taiwan and Southeast Asia also lost ground.

DECISION DOWN UNDER: Officials at the Reserve Bank of Australia kept interest rates unchanged at 1.5 percent following a monthly policy board meeting, saying it was the right level for sustainable economic growth and to hit inflation targets. More importantly, they indicated they wouldn’t follow counterparts in the U.S., Britain, Europe and Canada who have started raising rates or are considering doing so. “The outlook continues to be supported by the low level of interest rates,” the RBA said. Meanwhile, consumer confidence strengthened and retail sales rose for a second straight month, according to new data.

ROCKET LAUNCH: South Korean shares wobbled briefly after first reports that Pyongyang fired yet another ballistic missile toward Japan, then resumed sliding as more details came in. Officials said the missile, fired from North Phyongan province, flew for about 40 minutes, longer than any other previous similar test, and covered 930 kilometres (580 miles).

MARKET VIEW: The missile launch is “sort of sending risk topsy turvy right now,” said Stephen Innes, senior trader at OANDA. “Markets are a little bit thin so there could possibly be an overreaction, given that liquidity is a bit edgy with the holiday-thinned U.S. market conditions.”


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes