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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Yen, bonds and gold gain on N Korea nuclear test

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SYDNEY: The Japanese yen, gold and sovereign bonds all rose on Monday as North Korea’s latest nuclear test, and reports Pyongyang was making preparations for another missile launch, provoked the usual knee-jerk shift to safer harbours.


The dollar was marked down to 109.57 yen, having been as low as 109.22 and off a whole yen from late on Friday.


Japan is the world’s largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis, thus pushing up the yen. Many wonder, however, if Japanese assets would really remain in favour if an actual war broke out in Asia.


Japan’s Nikkei did not take the news well, losing 0.9 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.75 per cent with South Korea’s main index down 1 per cent.


“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 Asian research than Rob Carnell.


“But we have been here now many, many times,” he added. “Unless this is the precursor to US military action, which we doubt, then in a little over a day or two, tensions will calm again, making this a good buying opportunity for investors with a strong enough nerve.” European bourses looked set to open lower with Eurostoxx 50 and FTSE futures off 0.4 per cent and the DAX contract down 0.6 per cent.


Futures on 10-year US Treasuries climbed 7 ticks, while yields on Japanese 10-year government debt rallied to their lowest since last November.


E-Mini futures for the S&P 500 dipped 0.4 per cent, though US markets will be closed on Monday for the Labour Day holiday.


ECB MEETING LOOMS: The dollar slipped to 0.9591 Swiss francs from 0.9646, and was off 0.25 per cent against a basket of currencies at 92.583. Gold hit a 10-month high and was last up 0.9 per cent at $1,337.14.


The euro was 0.3 per cent firmer at $1.1898, though investors were wary ahead of a European Central Bank meeting on Thursday. There have been reports some at the ECB are unhappy with the euro’s strength and are in no rush to signal the start of a tapering in its massive balance sheet.


Wall Street had ended last week on a mildly positive note after a tepid US jobs report kept expectations muted for another interest rate hike this year.


The Dow ended on Friday with a gain of 0.18 per cent, while the S&P 500 added 0.20 per cent and the Nasdaq 0.1 per cent.


US job growth slowed more than expected in August after two straight months of hefty increases. Nonfarm payrolls increased by 156,000 last month, while economists had forecast an increase of 180,000.


On a brighter note, the Institute for Supply Management reported its factory activity index soared to 58.8 in August, the highest reading since April 2011.


— Reuters


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