US stock futures and Asian shares dipped after North Korea fired another missile over Japan into the Pacific Ocean on Friday, demonstrating Pyongyang's defiance in the face of intensifying sanctions.
US stock futures fell 0.2 per cent while the dollar fell to as low as 109.55 yen from around 110.20 in late US trade on Thursday. It last stood at 109.98 yen. Japan's Nikkei were almost flat while South Korea's Kospi and Australia's main index both dipped 0.3 per cent. MSCI's Asia-Pacific share index excluding Japan was down 0.1 per cent.
Japan said the North Korean missile fell into sea about 2,000 km (1,240 miles) east of Hokkaido. The launch came only days after the UN Security Council approved new sanctions against Pyongyang for its Sept 3 nuclear test.
Still, markets are growing used to North Korea's sabre-rattling. “There have been reports suggesting North Korea is preparing a missile launch, so this was by no means a surprise,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities. “Also, in the past, markets have stabilised within a few days after North Korea's missile launch. So in a way this seems like something markets have already experienced before, thus producing limited reaction,” he added.
Before North Korea's missile launch, US bond yields had risen while Wall Street shares were mixed after US consumer inflation data rekindled expectations that the Federal Reserve will raise interest rates in December.
The consumer price index rose 0.4 per cent from previous month in August, faster than the 0.3 per cent increase forecast among analysts polled by Reuters . The so-called core CPI, which excludes volatile energy and food prices, rose 0.2 per cent. On a 12-month basis, it was 1.7 per cent, above the 1.6 per cent forecast by economists.
Following the data, the US Fed funds rate futures were pricing in about 45 per cent chance the Fed will raise rates by December, compared to around 25 per cent at the start of this week.
The 10-year US Treasuries yield rose to as high as 2.225 per cent. It slipped back to 2.178 per cent in Asia on Friday.
In currency markets, the dollar failed to capitalise on the data as its rally since the start of the week ran out of steam. The euro traded at $1.1923, off Thursday's two-week low of $1.18365. The British pound held firm after the Bank of England warned it might raise interest rates for the first time in a decade in the “coming months” if the economy and price pressures keep growing. The pound hit a one-year high of $1.3407 on Thursday and last stood at $1.3401.
Oil prices jumped, with international benchmark Brent futures hitting a five-month high, supported by a string of reports forecast the market would tighten further as fuel demand increased. Brent crude futures traded at $55.27 per barrel after hitting a high of $55.99 on Thursday.
Elsewhere, bitcoin tumbled 16 per cent on Thursday as Chinese news outlet Yicai reported that the country plans to shut down all bitcoin exchanges by the end of September. BTCChina, one of China's top three exchanges, said on Thursday that it would stop all trading from Sept 30.