Stocks Mixed; Yen, Gold Drop Amid Missile Fatigue: Markets Wrap – Bloomberg

Stocks in Europe edged lower as North Korea’s latest missile launch raised geopolitical tensions, though declines in traditional risk assets including gold and the yen showed markets are becoming inured to the cycle of provocation and diplomatic reaction.

While many industry sectors in the Stoxx Europe 600 Index were in the green, declines for banks, led by Bank of Ireland Group Plc, offset gains for retailers after Hennes & Mauritz AB reported a good start to the autumn season. Cruise-ship operator Carnival Plc’s slump weighed on travel and leisure shares. Earlier, South Korea’s Kospi index rebounded from a decline while equities in Tokyo rose. Bonds were steady and most major currencies lacked direction, though the British pound extended its advance after the Bank of England’s hawkish tilt on Thursday. West Texas crude fell back below $50 a barrel.

Markets are showing signs of becoming conditioned to actions from North Korea, which has launched more than a dozen missiles this year and tested a nuclear device. Global equities climbed to a record high this week as earnings and confidence in economic growth overshadowed tensions on the Korean Peninsula. The MSCI All Country World Index is poised for its third week of gains in four.  

“I wouldn’t necessarily say this is an escalation,” James Soutter, portfolio manager at K2 Asset Management in Melbourne, said of the missile launch. “This is more of a continuance of provocation. Hence markets won’t like it, but I don’t think it’s necessarily the precursor to a sustained market pullback.”

Meanwhile, Thursday’s U.S. economic data lent support to those expecting a further run up in U.S. bond yields as inflation topped estimates and traders increased bets on another rate hike in 2017. While China data this week softened, the signals emanating from financial markets remain decidedly bullish.

Mike Schumacher, head of rates strategy at Wells Fargo Securities, discusses the timing of the next Fed rate hike.

Markets: Asia. (Source: Bloomberg)

Elsewhere, bitcoin has slumped more than 20 percent so far this week. China notified regional regulators that it aims to stop exchange trading of cryptocurrencies by the end of September, according to people familiar with the matter.

Terminal subscribers can read more in our Markets Live blog.

Still to come this week:

  • U.S. retail sales, consumer sentiment and industrial production data are due Friday.

Here are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index fell 0.2 percent as of 9:43 a.m. London time. 
  • Futures on the S&P 500 Index fell 0.1 percent. 
  • The MSCI All-Country World Index climbed 0.1 percent. 
  • The MSCI Emerging Market Index gained 0.2 percent. 
  • The U.K.’s FTSE 100 Index sank 0.4 percent to the lowest in almost 19 weeks.

Currencies

  • The Bloomberg Dollar Spot Index decreased 0.1 percent. 
  • The euro advanced less than 0.05 percent to $1.1923. 
  • The British pound increased 0.4 percent to $1.3453, the strongest in almost 15 months.  

Bonds

  • The yield on 10-year Treasuries increased less than one basis point to 2.19 percent. 
  • Germany’s 10-year yield fell less than one basis point to 0.41 percent. 
  • Britain’s 10-year yield climbed less than one basis point to 1.087 percent.

Commodities

  • Gold dipped 0.2 percent to $1,327.43 an ounce. 
  • West Texas Intermediate crude declined 0.4 percent to $49.67 a barrel, the first retreat in a week. 
  • Copper increased 0.2 percent to $2.96 a pound.

Asia

  • The Topix index rose 0.4 percent at the close in Tokyo to complete its best week since April. South Korea’s Kospi index ended 0.4 percent higher after dropping as much as 0.5 percent, while Australia’s S&P/ASX 200 Index fell 0.8 percent.
  • Hong Kong’s Hang Seng Index swung between gains and losses, and the Shanghai Composite Index was also lower.
  • The Japanese yen declined 0.4 percent to 110.71 per dollar, the weakest in five weeks.

— With assistance by Matthew Burgess, and Adam Haigh

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