Asia is officially open and the Kospi is getting hit hard right out of the gate, as are the Nikkei and the won.
Here’s the open in South Korean equities:
And here’s USDKRW, up as high as 1,129.65:
As far as Japanese stocks, “investors will stay wary over North Korea risks, with eyes on how Russia and China respond, as the yen will have a negative impact on local corporate earnings if its continues to trade beyond the 110 per dollar mark”, Daiwa’s Kazuhiro Takahashi says, adding that the real tipping point could come if the U.S. tries to cut off oil to the North.
The oil issue has been contentious for its potential to spark a humanitarian crisis. “Eyes are on whether countries will push for an oil embargo on North Korea, which in the past, has served as a trigger for physical conflict,” Takahashi adds.
As far as the yen goes, you’re reminded that traders are short:
“There’s a risk that yen could push back toward this year’s high around 108.13 per dollar and if it were to do so, that could trigger an almighty short squeeze,” Bloomberg’s Garfiled Reynolds warns, adding that leveraged players’ total net short position slid by just 323 contracts to 60,309 in the week ended Aug. 29″ meaning that betting against the yen “is still the third-most popular bet across major currency pairs.”
As far as U.S. equities go, here’s what Mellody Hobson president of Chicago-based Ariel Investments just said on BBG TV: “On the S&P side I think the market predicts the future and what it is saying right now is that it does not foresee a calamity.”
So that’s what we’re going with: “no calamity.”
