Stocks and the dollar fell on Monday while the Japanese yen, gold and sovereign bonds rose after North Korea’s most powerful nuclear test to date dampened investor appetite for risk.
LONDON (Reuters) – Stocks and the dollar fell on Monday while the Japanese yen, gold and sovereign bonds rose after North Korea’s most powerful nuclear test to date dampened investor appetite for risk.
Sunday’s test, and reports from Seoul that Pyongyang was preparing for another missile launch, sparked warnings from Washington and drove South Korea’s stock market. KS11 1.2 percent lower. Japan’s Nikkei. N225 lost almost 1 percent.
With Wall Street closed for the Labor Day holiday at the start of a week likely to become increasingly dominated by a number of central bank meetings, the fall in European stocks was less marked.
The pan-European STOXX 600 index lost 0.4 percent, led by a 0.7 percent fall in banks. SX7P.
“The markets’ reaction seems similar to when missile launches have taken place in the past. Investors sell stock, rush to safe havens, assess the situation, and then buy the dips as tension eases, ” said Hussein Sayed, chief market strategist at brokers FXTM.
The dollar, down 0.3 percent against the basket of currencies used to measure its broader strength, fell 0.6 percent to 109.60 yen JPY=, having been as low as 109.22 and off a whole yen from late on Friday.
Investors tend to buy the yen in time of political or market tension on expectations Japanese investors will over time repatriate their money.
The Swiss franc CHF=, also viewed as a safe place to park money, rose 0.8 percent to 0.9579 per dollar.
Driven by the Korean losses, MSCI’s broadest index of Asia-Pacific shares outside Japan.
