Asia Markets fall after N Korea test nuclear bomb

North Korea’s biggest ever nuclear test has sent a fresh wave of nervousness through global markets.

The South Korean currency, the won, took a hit too, losing nearly 1% against the dollar.

But the losses were muted. Traders noted that the impact of other recent North Korea scares was short-lived, as investors switched their focus back to very low interest rates and the more attractive returns stocks offer.

“The trend in recent months has been for knee jerk risk-averse reactions to geopolitical events to be followed by a gradual recovery … as global monetary accommodation has its usual pacifying effect in markets,” noted Kit Juckes at Societe Generale. “A repeat of that pattern seems eminently possible this week.”

With the U.N. Security Council meeting later Monday, “the key now is how the international community will respond, given how ineffective the tightened U.N. sanctions have been at discouraging North Korea’s ambitions,” said Stephen Innes, head of Asia trading at online broker Oanda.

Related: What’s left to sanction in North Korea after its big nuclear test?

Some analysts say it will take a lot more than further missile and nuclear tests by Pyongyang to really put a dent in the South Korean stock market. The Kospi index has outperformed the S&P 500 and the Dow so far this year despite a series of unsettling developments concerning North Korea.


U.S. markets are closed Monday for the Labor Day holiday.


CNN Money

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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