ASIA-PAC MID-SESSION UPDATE: Asia markets were spooked after North Korea suggested it could test an H-bomb in the Pacific

Asia equity markets trade mostly negative following the losses on Wall St. where the DJIA snapped a 9-day win streak, and with sentiment dampened after North Korean verbal provocation in which its Foreign Minister suggested its counter-measures could mean testing a hydrogen bomb in the Pacific. This pressured Nikkei 225 (-0.3%) as well as most indices in the region, although ASX 200 (+0.3%) was kept afloat by strength in its largest weighted financials sector. Hang Seng (-0.7%) and Shanghai Comp. (-0.4%) conform to the subdued tone in the region with sentiment reeling from a downgrade to China and Hong Kong’s sovereign ratings by S&P.

In FX markets, the alarming North Korean rhetoric spurred safe-haven flows into JPY which pressured USD/JPY to below the 112.00 handle and weighed on JPY crosses. Elsewhere, HKD and antipodean currencies are subdued after the China rating downgrade and weakness in commodities, with NZD also hampered by election risks ahead of tomorrow’s polling day.

Finally, 10yr JGBs and T-notes gained on the safe-haven flows, while focus now shifts to the enhanced liquidity auction for longer dated Japanese bonds later.

22 Sep 2017 - 03:28- Important- Source: RANsquawk

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