Asian stocks lower as US North Korea nuclear tensions rise

Asian stock markets slid Wednesday after President Donald Trump and North Korea traded threats over the North’s nuclear program and Wall Street declined overnight. (Photo by Allan Ajifo [CC BY 2.0)

KEEPING SCORE: Tokyo’s Nikkei 225 tumbled 1.3 per cent to 19,740.12 and Seoul’s Kospi fell 0.8 per cent to 2,375.88. The Shanghai Composite Index lost 0.2 per cent to 3,275.01 and Hong Kong’s Hang Seng was off 0.8 per cent at 27,629.68. India’s Sensex shed 0.2 per cent to 31,951.28 and benchmarks in Taiwan, New Zealand and Thailand also declined. Sydney’s S&P-ASX 200 gained 0.5 per cent to 5,773.70 while Manila and Jakarta also rose.

KOREA JITTERS: North Korea and the United States traded escalating threats, heightening fears that a miscalculation might spark conflict. Trump warned that the North would be met “with fire and fury.” Pyongyang said it was examining plans for attacking Guam, a U.S. territory in the Pacific with a military base. The comments follow reports that the North has mastered a technology needed to strike the United States with a nuclear missile.

WALL STREET: Losses in health care and consumer-focused companies pulled U.S. stocks lower, snapping a 10-day winning streak for the Dow Jones industrial average. Energy stocks fell along with crude prices as investors kept an eye on the latest company earnings and geopolitical news. The market slide accelerated slightly in the last half-hour of trading as Trump denounced North Korea’s nuclear program. The Standard & Poor’s 500 index fell 0.2 per cent, to 2,474.92. The Dow slid 0.2 per cent to 22,085.34. Both were coming off record highs. The Nasdaq composite lost 0.2 per cent, to 6,370.46.

U.S. ECONOMY: Employers posted a record number of open jobs in June while a survey of small businesses showed optimism improving. Job openings jumped 8 per cent to 6.2 million, the Labor Department said Tuesday. The number of people quitting their jobs also dropped. The data suggest employers have plenty of jobs to fill but are struggling to find workers. The NFIB small business optimism index rose to 105.2 in July from 103.6 in June. That “looks high enough to be consistent with a 5 per cent-plus pace for real GDP growth,” said Jim O’Sullivan of High Frequency Economics in a report.

FED WATCH: Investors looked ahead to an appearance Thursday by Bill Dudley, president of the U.S. Federal Reserve Bank of New York, for signs of the Fed’s outlook on the economy. They are looking for confirmation that the Fed is sticking with plans for a possible December interest rate hike.

ANALYST’S TAKE: The U.S. jobs figure “was through the roof” and the NFIB survey “painted a much better picture for the U.S. economy than most believed,” Stephen Innes of OANDA said in a report. Against that backdrop, Dudley might provide an upbeat outlook and confirm that the Fed is on track for a rate hike, said Innes. Still, he said, “the Washington, D.C., bedlam and North Korea’s saber-rattling is muddying the broader landscape.”

CURRENCY: The dollar declined to 109.93 yen from Tuesday’s 110.34. The euro edged down to $1.1726 from $1.1751.

ENERGY: Benchmark U.S. crude lost 15 cents to $49.02 per barrel in electronic trading on the New York Mercantile Exchange. The contract shed 22 cents on Tuesday to close at $49.17. Brent crude, used to price international oils, gave up 22 cents to $51.92 in London. It declined 23 cents on Tuesday to $52.14.