Asia-Pac Mid-Session – Geopolitical tensions bubble as US and South Korea set to start military drills

Asian equity markets were trading mostly lower at the mid-point of the session with the Nikkei 225 lower by just shy of half a per cent amid geopolitical tensions and the latest political developments in the US. After Bannon’s departure on Friday, he said he was “ready for war”, but what that actually means is up for debate. Tensions on the Korean peninsula ratcheted up again as the US and South Korea were set to begin military drills. North Korea responded, threatening a “merciless strike” on the US. Nevertheless, the Kospi was relatively resilient, trading lower by just 0.2%. The ASX 200 has been driven by some major earnings with Fortescue Metals rising over 6% after doubling their dividend. Chinese markets were higher, lifted by the telecoms sector after China Unicom confirmed a share placement to tech titans Alibaba, Tencent and Baidu. 

FX trading has been subdued with all major pairs within a 20 pip range as markets await the key speeches at Jackson Hole from Fed Chair Yellen and ECB President Draghi. A WSJ article speculated Draghi may signal QE could be withdrawn slowly, although it was more a speculative article rather than based on sources.

10-year JGBs are also relatively unmoved with the BoJ refraining from buying bonds under their QQE with YCC programme. Comments from BoJ Governor Kuroda failed to garner much attention, as he reiterated that the BoJ want to meet their price stability goal as soon as possible.  

21 Aug 2017 - 03:28- Fixed IncomeBank Speaker- Source: RANsquawk

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