Asia markets trade mixed; mostly shrug off North Korea missile

Asian markets traded mixed on Wednesday, but mostly shrugged off North Korea’s latest missile launch. North Korea on Wednesday local time launched a likely intercontinental ballistic missile that landed in the Sea of Japan, according to the Pentagon.

The launch, the North’s first since Sept. 15, came after the U.S. classified North Korea as a country that supported terrorism on November 20.

Following the launch, President Donald Trump said the U.S. would “take care of” the situation. Japanese Prime Minister Shinzo Abe and Trump have also agreed to increase their cooperation on the North, Reuters said, citing Japanese media.

North Korea later boasted through local media that its new ICBM was capable of reaching the U.S., but the rogue nation claimed its weapons program would not threaten countries that did not infringe on the North’s sovereignty.

Despite that, most markets in Asia edged higher, following the strong lead from U.S. stocks on tax reform progress and after Federal Reserve Chair nominee Jerome Powell’s Senate testimony.

“The markets seem to be more immune than in the past to North Korea’s missile testing,” Prakash Sakpal, Asia economist at ING, said in a morning note.

Japan’s Nikkei 225 shrugged off the North’s latest missile launch to rise 0.31 percent. Major exporters were mixed as the dollar held onto overnight gains against the yen, with automakers mixed, but tech names mostly higher. Trading houses and financials notched gains.

Retail sales in October declined 0.2 percent compared to one year ago, although the figure remained in line with what was forecast in a Reuters poll. That was the first fall in yearly retail sales in a year, Reuters said.

Across the Korean Strait, the benchmark Kospi index was little changed, trading higher by 0.01 percent as several blue-chip tech names declined. Heavyweight Samsung Electronics lost 1.2 percent while companies that have been sensitive to developments related to the THAAD anti-missile system traded mixed: Lotte Shopping fell 2.11 percent and LG Household and Healthcare advanced 0.08 percent.

Shares of cosmetics names Amorepacific and Cosmax were up 1.29 percent and 4.47 percent, respectively, following news that China would once again let travel agencies resume selling tour packages to South Korea.

Down Under, the S&P/ASX 200 was 0.43 percent higher, with heavily-weighted financial stocks climbing 0.66 percent. Sector-wise, utilities and retail names traded higher.

Greater China markets came under some pressure. Hong Kong’s Hang Seng Index slipped 0.3 percent. On the mainland, the Shanghai Composite shed 0.47 percent and the Shenzhen Composite edged down 0.76 percent. Blue chips sold off on the mainland, with the CSI 300 index down 0.92 percent.

Meanwhile, MSCI’s broad index of shares in Asia Pacific excluding Japan was slightly higher, rising 0.11 percent at 1:03 p.m. HK/SIN.

The North’s latest missile launch failed to dent sentiment stateside, with U.S. stocks closing the Tuesday session higher as markets focused on tax reforms. Financials also got a boost following Powell’s comments on regulation.

Major U.S. indexes closed at record highs, with the Dow Jones industrial average rising 1.09 percent, or 255.93 points, to close at 23,836.71.

Stateside, markets turned their attention to tax reform after the Senate Budget Committee approved the Republican tax bill, a crucial step toward a vote in the full chamber later this week. Senate Republicans, who hold 52 seats, can only afford to lose two votes to still pass the bill under special budget rules.

Meanwhile, Federal Reserve chair nominee Jerome Powell indicated the case for a December rate hike was “coming together.” Powell also said he favored “tailoring” regulations on financial institutions, adding that regulation on smaller banks ought to be decreased in intensity.

The dollar held onto most overnight gains after broadly firming following Powell’s comments, with the dollar index coming off a two-month low touched earlier this week. That index stood at 93.192 at 12:48 p.m. HK/SIN, after trading at the 92.8 handle earlier in the week.

The dollar was steady against the Japanese currency, with the greenback fetching 111.46, compared to Tuesday’s close of 111.45.

Also of note were reports that a divorce bill between the U.K. and the European Union had been agreed upon, with newspapers citing a sum around 50 billion euros ($59 billion), according to Reuters.

The pound traded at $1.3361 at 12:48 p.m. HK/SIN after rising as high as $1.3386 overnight from a low of $1.3219 in the last session.

In other news, bitcoin crossed the $10,000 mark early on Wednesday, according to industry site CoinDesk. The cryptocurrency has risen some 900 percent in value year-to-date.

Oil prices came under pressure ahead of a Thursday meeting of major oil producers. U.S. West Texas Intermediate shed 0.55 percent to trade at $57.67 per barrel. Brent crude futures declined 0.74 percent to settle at $63.14 per barrel.

Alibaba Group is selling a multi-tranche dollar bond which will price during U.S. hours, Reuters reported, citing a term sheet. The bond has five tranches — 5.5-year, 10-year, 20-year, 30-year and 40-year — and price guidance was indicated at approximately 100, 130, 140, 160 and 180 basis points above U.S. Treasurys, respectively.

Elsewhere, Vietnam intends to sell 54 percent of Sabeco, the country’s largest producer of beer, according to Reuters. Total foreign ownership in the brewer would be limited at 49 percent, Reuters added, citing an official. Source: CNBC

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