Asian Markets Fell on July 4 amid North Korea’s Missile Test

Economic calendar

  • 8:30 AM EST – European Central Bank’s Peter Praet speaks
  • 9:45 PM EST – China Caixin Services PMI (purchasing managers index)

China

After rising for two consecutive trading weeks and starting this week on a stable note, China’s Shanghai Composite Index pulled back on July 4, 2017. On July 4, the index started out lower and maintained weakness throughout the day.

Asian Markets Fell on July 4 amid North Korea’s Missile Test

The correction rally in major Chinese blue chip stocks is weighing on the index. Reports on the inclusion of mainland shares in the MSCI Index triggered a rally in blue chip stocks in June. However, blue chip stocks started correcting after the inclusion of Chinese stocks in the MSCI Index.

Despite measures taken by the People’s Bank of China, very limited buying pressure was observed in Chinese markets on July 4, as the markets were cautious ahead of US market holiday on July 4. North Korea’s missile launch test ahead of the US-China meeting this week also decreased the risk appetite in Asian markets.

The People’s Bank of China injected 99.5 billion Chinese yuan into money markets in June to improve liquidity, a rise of 95% compared to May. The market is looking forward to the release of the Caixin Services PMI, which is scheduled to release at 9:45 PM EST on July 4.

On July 4, the Shanghai Composite Index fell 0.41% and ended the day at 3,182.80. The SPDR S&P China ETF (GXC) rose 0.83% to $90.02 on July 3.

Hong Kong

After rising 17% from January to May, the Hong Kong Hang Seng Index lost momentum and traded in a range starting in mid-June. On July 4, the index broke out of this range and suffered its worst one-day fall in 2017.

The slump in the Hang Seng Index’s heavyweight stock Tencent weighed on the market and dented sentiments on July 4. The index fell 1.5% and closed the day at 25,389.01. The iShares MSCI Hong Kong ETF (EWH) fell 0.38% to $23.34 on July 3.

Japan

After starting the week on a stable note and trading in a range on July 3, Japan’s Nikkei Index opened higher on July 4 due to the weaker Japanese yen. However, sentiments turned weak amid missile testing by North Korea, pulling the index lower. Weakness in the retail and real estate sectors also weighed on the Nikkei, which closed the day at 20,032.35 after falling 0.12%.

The iShares MSCI Japan ETF (EWJ) closed at $53.39, a fall of 0.48%, on July 3. In the next article, we’ll discuss how European markets performed in the morning session on July 4.