Nichola Saminather and Hideyuki Sano, Reuters
Asian shares extended losses after North Korea conducted its fifth and most powerful nuclear test on Friday, heightening geopolitical tensions in the region at a time when investors are grappling with slowing global growth.
Stocks were already on the back foot when the North Korean news rattled markets, with uncertainty over the prospect of further easing from the European Central Bank pressuring global equities and bonds.
European shares look set to follow Asia lower, with financial spreadbetters expecting Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 to all open down 0.1%.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.5% after touching a 13-month high on Thursday. The decline shrank gains for the week to 2.5%.
Japan’s Nikkei closed flat after pulling back earlier on reports of the North Korean nuclear test. It is up 0.2% for the week.
North Korea’s nuclear test set off a blast that was more powerful than the bomb dropped on Hiroshima, with the nation saying it had mastered the ability to mount a warhead on a ballistic missile.
South Korea’s KOSPI also extended losses on its neighbor’s nuclear activity. After opening 0.7% lower, it was last trading down 1.3% from Thursday’s close. China’s CSI 300 index was 0.25% lower, and the Shanghai Composite was down 0.2%. They are set for gains of 0.7% and 1%, respectively, for the week.
The latest China data dump
China’s consumer price inflation slowed to its weakest pace in almost a year in August, missing expectations. Still, moderating declines in the producer price index added to recent evidence of a steadying economy.
That evidence included data on Thursday showing China’s imports rose unexpectedly in August for the first time in nearly two years, suggesting domestic demand may be picking up. Exports also showed signs of improvement, falling less than expected.
Hong Kong was the sole gainer among major Asia ex-Japan markets, with shares up 1.4%, extending their weekly advance to 4.2%, the most in almost two months. The market has been buoyed by inflows from China as investors bet on gains ahead of the launch of a new cross-border share link.