Asia
A revival in hostilities between North Korea and the West turned investors away from equities after a short period of relative calm in Asian markets. With China banning its banks from doing business with North Korea, and Washington and Pyongyang engaging in a renewed war of words, the region’s equities gave up recent gains.
Japanese indices were nonetheless composed despite threats by North Korea to test a hydrogen bomb in the Pacific Ocean: the Nikkei 225 held above the 20,000 level it broke through earlier this week, and the Topix, while a touch lower on Thursday’s close, is still around two-year highs. Market moves were again limited by the yen’s rise against the dollar after a week in which the US currency had been in the ascendant.
Other markets in Asia-Pacific fell further: Hong Kong’s Hang Seng and South Korea’s Kospi were off nearly 1% on the day. China’s CSI 300 closed unchanged, as investors weighed ratings agency Standard & Poor’s decision to downgrade the country’s credit rating - as well as the obvious geopolitical concerns.
Europe
Investors in Europe had many political factors to consider on Friday. UK prime minister Theresa May will speak in Florence and try to articulate a coherent vision of Britain’s exit from the European Union and argue for transitional arrangements after 2019. Germany heads to the polls this weekend, with chancellor Angela Merkel expected to remain in power.
A surge in popularity for nationalist party AfD could unsettle currency and stock markets next week if the polls are correct. In terms of economics news, France’s second-quarter GDP was stronger than expected, as was Germany industry data on manufacturing and services. PMI surveys for the eurozone for September were also above forecasts, in line with recent data suggesting the currency Bloc’s economy is building momentum.
The UK’s FTSE 100 index was slightly lower on the day, while Germany and France indices were a touch higher despite falls across a range of global stock markets.
North America
US stock markets closed lower on Thursday after a recent strong run of gains and futures suggest that North Korea fears will unsettle investors again on Friday when markets open. As in Europe, the United States is also awaiting PMI data on services and manufacturing for September. Weekly rig count data will also give some insight into the state of the US oil market.
Canada is expecting CPI inflation data for August to show a steeper rise in the cost of living as the economy expands. The country’s retail sales numbers for July are expected to support the same trend. Otherwise the earnings calendar for Friday is light in North America ahead of results next week from Nike (NKE) and BlackBerry (BB).
:quality(80)/cloudfront-us-east-1.images.arcpublishing.com/morningstar/DJVWK4TWZBCJZJOMX425TEY2KQ.png)
