Asia report: Markets lower after North Korea bomb test

Markets in Asia were mostly lower on Monday as investors clambered for safe havens, after geopolitical tensions tightened further after North Korea confirmed it tested a hydrogen bomb underground over the weekend.

In Japan, the Nikkei 225 was down 0.93% at 19,508.25, as the safe-haven yen strengthened 0.63% to JPY 109.55 against the dollar.

On the mainland, the Shanghai Composite bucked the regional trend and added 0.38% to 3,379.984, and the Shenzhen Composite was 0.6% firmer at 1,968.12.

South Korea’s Kospi was down 1.19% at 2,329.65, while the Hang Seng Index in Hong Kong slid 0.76% to 27,740.26.

Losses were seen across all sectors in Seoul, with the major exporters particularly hard hit - Hyundai Motor was off 2.1% and Samsung Electronics fell 0.95%.

Pyongyang claimed it had tested a hydrogen bomb in Sunday, intended to be carried by a long-range missile, which it described as a “perfect success”.

It was estimated to have an explosive yield of around 100 kilotons, according to South Korean officials.

The sudden jump in prices for safe-haven assets across the region was seen as a bit of a knee-jerk reaction to the North Korean nuclear test by some market watchers.

“Unless this is the precursor to US military action - which we doubt - then in a little over a day or two, tensions will calm again, and so will markets,” noted ING Asia’s head of research Rob Carnell.

Investors were also still digesting disappointing US employment data from Friday, with the nonfarm payrolls showing 156,000 jobs were created in August, compared to forecasts for 180,000.

Oil prices were lower during Asian trading but turned mixed as Europe took the trading baton, with Brent crude last down 0.69% to $52.39 while West Texas Intermediate was 0.06% higher at $47.32.

In Australia, the S&P/ASX 200 fell 0.39% to 5,702.00, weighed down by the hefty financials subindex, as the gold mining sector rose off the back of higher gold prices.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 fell 0.2% to 7,808.22, led lower by subscription broadcaster Sky - not related to its London-listed namesake - which tumbled 6.8% to its lowest level in over 18 years.

The down under dollars were mixed, with the Aussie last 0.14% weaker against the greenback at AUD 1.2567, while the Kiwi - sometimes seen as a relatively safe haven currency - strengthened 0.2% to NZD 1.3939.