Stocks Drop, Yen Rises on Renewed N. Korea Tension: Markets Wrap

After a flat start to Friday’s Asian session, benchmarks dropped in Tokyo and Seoul, and S&P 500 Index futures declined. Hong Kong shares fell as S&P Global Ratings cut the city’s sovereign rating a day after it downgraded China. Bond yields retreated and the yen and gold climbed after Yonhap News cited a North Korean official saying the “highest level of hard-line” countermeasures against the U.S. could refer to a hydrogen-bomb in the Pacific Ocean. North Korea’s nuclear tests up to now have taken place on its own soil.

The fresh threats diverted attention from the monetary-policy decisions that have dominated markets’ focus this week. Investors are keeping an eye on speeches by Federal Reserve officials that may offer further clues to the central bank’s thinking after bets for higher rates by year-end were raised following this week’s policy meeting.

The Australian dollar added to losses triggered by a tumble in iron ore prices and dovish language from the nation’s central bank governor.

What to watch out as the week comes to an end:

Bank Indonesia will probably keep its benchmark rate at 4.5 percent. U.S. September preliminary Markit PMI data, which are predicted to show an acceleration in manufacturing and a slight cooling in services growth. Euro-area PMIs on Friday will probably provide additional evidence that growth moderated in the third quarter, Bloomberg Intelligence said. Theresa May delivers a keynote speech on Brexit in Florence. Campaigning continues in Germany before the Sept. 24 election. New Zealand heads to the polls on Saturday.

Here are the main moves in markets: Stocks

Japan’s Topix index fell 0.3 percent as of 2:26 p.m. Tokyo time and South Korea’s Kospi index slid 0.8 percent. Australia’s S&P/ASX 200 Index added 0.4 percent. Hong Kong’s Hang Seng Index lost 0.8 percent and the Shanghai Composite Index dropped 0.4 percent. Futures on the S&P 500 Index retreated 0.3 percent. The underlying benchmark fell 0.3 percent on Thursday. The MSCI Asia Pacific Index declined 0.3 percent.

Currencies

The Bloomberg Dollar Spot Index fell 0.2 percent after touching the highest in more than two weeks on Thursday. The Japanese yen gained 0.6 percent to 111.85 per dollar, advancing the most in more than two weeks. The Australian dollar was little changed at 79.30 U.S. cents after tumbling 1.3 percent on Thursday. The euro added 0.2 percent to $1.1963.

Bonds

The yield on 10-year Treasuries fell two basis points to 2.25 percent, ending five days of rising yields. Australian 10-year bond yields dropped four basis points to 2.79 percent.

Commodities

West Texas Intermediate crude was little changed at $50.62 a barrel. Gold rose 0.5 percent to $1,297.38 an ounce. Iron ore futures on SGX AsiaClear in Singapore dropped 0.9 percent to $62.22 a metric ton, adding to a 6.3 percent plunge on Thursday. Copper, aluminum, zinc, nickel and tin all fell on the London Metals Exchange.