Investors are getting less excited by North Korea’s antics. The Communist state just launched its second missile over Japan in as many months, and Asian markets are shrugging it off.
North Korea Taunts Japan with Second Missile Strike
It didn’t take long for North Korea to vent its frustration after the U.N. approved fresh sanctions targeting the hermit state. Pyongyang apparently launched a missile at 6:57 a.m. Friday that flew over the northern island of Hokkaido, according to a Japanese government spokesman. The missile landed some 2,200 km away in the Pacific Ocean.
The North Koreans launched a similar test last month in a show of defiance following a verbal war with U.S. President Donald Trump. The latest provocation comes days after the U.N. Security Council targeted Pyongyang with fresh sanctions over its aggressive nuclear program.
The sanctions were part of a U.S.-drafted resolution that intends to do the following:
- Limit North Korea’s oil imports
- Ban its textile exports
- End additional laborer contracts held overseas
- Reduce smuggling efforts
- Prevent Pyongyang from entering joint ventures with other nations
- Sanction government entities
North Korea saber-rattling has been a major source of volatility in the financial markets, but that appears to be changing. On Friday, Asian markets held their ground in the wake of the missile test. Japan’s 225-issue Nikkei rose 0.5%. Mainland China’s CSI 300 Index advanced 0.2%. Hong Kong’s Hang Seng Index also traded in positive territory.
The Japanese yen, a highly liquid global reserve currency, rose immediately after news of Pyongyang’s missile test. But the gains didn’t last very long. In fact, it took about three minutes for the yen to lose two-thirds of its gain. At time time of writing, the yen has moved into negative territory against its U.S. counterpart.
Japan’s currency is often seen as a gauge of global financial stress. Investors exchange other currencies for yen when they feel geopolitical unrest will impact the financial markets. Calm appear to have prevailed Friday morning.
Cryptocurrency Outlook Remains Negative
The global cryptocurrency market has shed billions this week as China expanded its assault on the asset class. Beijing has taken major steps toward closing its domestic bitcoin exchanges. Earlier this month, it announced a ban on initial coin offerings (ICOs), the breakthrough funding mechanism that has taken the world by storm.
The crash extended to all the major cryptocurrencies, including bitcoin and ethereum. The total market cap for the crypto asset class has plunged 35% over the past two weeks. As the following chart illustrates, the sky hasn’t stopped falling since Tuesday.
China’s position on cryptocurrency diverges sharply from that of neighboring Japan. The Japanese government has taken major steps toward recognizing bitcoin and regulating its use.