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A push for more sanctions on North Korea, PBOC lays the smackdown on ICOs, and the RBA kicks off a busy month for central bankers. Here are some of the things people in markets are talking about.
‘Begging for War’
North Korea is “begging for war” by testing a nuclear weapon, said U.S. ambassador to the U.N. Nikki Haley on Monday in a push for harsher sanctions against Kim Jong Un’s regime. In a telephone call, U.S. President Donald Trump and South Korean President Moon Jae-in “agreed to maximize pressure” on North Korea. Moon’s government acceded to a temporary full deployment of a missile defense system and warned that its neighbors’ actions will damage financial markets as well as the real economy. Shutting down China’s oil exports to the unruly agitator next door are in focus as a way to bring North Korea to heel, though Beijing is unlikely to agree to take such a dramatic step. South Korea’s Chang Kyung-soo, acting chief of the Defense Ministry’s policy planning office, said on Monday that his country’s northern neighbor is preparing for a possible intercontinental ballistic missile launch.
Cryptocurrencies were slammed on Monday after the People’s Bank of China outlawed initial coin offerings, with bitcoin falling as low as $4,164.80 – 15 percent below Friday’s close. The manifold restrictions on ICOs imposed by China could affect over 100,000 domestic speculators. All this is bad news for former reality TV star and heiress Paris Hilton, who tweeted that she was “looking forward to participating” in an initial coin offering by LydianCoin Pte Ltd. just hours before China’s declaration. Mark Mobius, executive chairman at Templeton Emerging Markets Group, warned that this is only the beginning of government crackdowns on cryptocurrencies.
The first major central bank decision in a jam-packed month of monetary announcements comes courtesy of the Reserve Bank of Australia. Officials are expected to leave rates unchanged at record lows amid slumping consumer confidence and a buoyant currency; statement is due at 1:30 p.m. Tokyo time. Earlier in the day, a pair of service-sector surveys out of Australia and second-quarter current account data are also slated to be published. Another key event on the economic calendar is the 10:45 a.m. Tokyo time release of the Caixin China services purchasing managers’ index for August, after both manufacturing gauges unexpectedly strengthened on the month. Elsewhere, second-quarter construction work in New Zealand is forecast to rebound 1.6 percent quarter-on-quarter after a decline of 3.5 percent in the first three months of the year. Both headline and core inflation in the Philippines are forecast to quicken in August to annual paces of 3 and 2.2 percent, respectively. Also on deck: South Korea’s current account balance for July as well as Japan and India’s services PMIs for August.
The Swiss franc and Japanese yen were the two best-performing currencies on Monday while the Bloomberg Dollar Spot Index dipped for the third straight session following North Korea’s latest act of aggression. One week implied volatility on the franc eclipsed that of the yen as investors seek a hedge that isn’t in Kim Jong Un’s line of fire. Gold also gained, rising to a fresh 11-month high. S&P 500 Index futures and the Stoxx Europe 600 Index traded to the downside; U.S. markets were closed on Monday for Labor Day. Gasoline fell to a one-week low as U.S. refiners prepared to resume operations.
S&P/ASX 200 and Nikkei 225 futures are pointing to a rebound for Asian equities, which opened the week with widespread losses across regional benchmarks. Mainland Chinese stocks were a rare pocket of strength in the area. Though the Kospi Index fell more than 1 percent on Monday, at least one strategist is advising domestic investors to take advantage of the buying opportunity.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Hong Kong's sky-high rents are forcing finance workers into dorm life.
- Tech-savvy Singapore still prefers cash over digital payments.
- Norway’s sovereign wealth fund wants to cut currency risk.
- Brexit decision “stupid,” says top E.U. official.
- Hong Kong regulator stepping up checks on loans to conglomerates.
- No big breakthrough in latest round of Nafta talks.
- Hollywood’s terrible summer.