Global stocks shaky, safe havens up after cyber attack, North Korea missile test

Reuters News
Posted: May 14, 2017 9:01 PM

By Nichola Saminather

SINGAPORE (Reuters) - Asian stocks got off to a shaky start on Monday as a ransomware attack that locked up more than 200,000 computers in over 150 countries and a missile test by North Korea on Sunday kept investors on edge.

Safe-haven assets including the yen, gold and U.S. Treasuries held their gains from Friday after weaker-than-expected economic data from the U.S. dented risk appetite.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed.

Japan's Nikkei retreated 0.3 percent on a stronger yen.

Australian shares fell 0.2 percent, while South Korea's KOSPI was little changed.

The weekend cyber attack, which slowed down after a security researcher stumbled on a way to at least temporarily limit the worm's spread, may speed up on Monday when employees returning to work turn on their computers.

A more advanced version of the worm will also likely remove the flaw that allowed it to be slowed, the researcher warned.

"We do not know the extent of damage or information that was captured in the attack; it’s likely we’ll hear more details about it today but initial reports suggest it was caught relatively early and limited to older computers," said James Woods, global investment analyst at Rivkin.

"We are seeing safe havens bid a little higher this morning with the yen and gold higher while U.S. Treasury yields are edging lower," Woods said.

"Certainly contributing to this was the launch of another missile test by North Korea over the weekend... the Korean won has weakened, which may suggest the test has traders a little on edge."

North Korea said on Monday it had successfully tested a newly developed mid-to-long range missile on Sunday aimed at verifying the capability to carry a "large scale heavy nuclear warhead." The missile landed in the sea 97 km (60 miles) south of Russia.

North Korea is believed to be developing an intercontinental ballistic missile (ICBM) capable of carrying a nuclear warhead and reaching the mainland United States.

The Korean won weakened, with the dollar up 0.3 percent at 1,126.12 won on Monday.

On Friday, the S&P 500 and the Dow Jones Industrial Average closed lower after April retail sales rose by a less-than-expected 0.4 percent from the previous month. Consumer prices also missed expectations, and worries deepened over the health of department stores after weak earnings reports.

The dollar inched lower to 113.28 yen in early trade, extending Friday's 0.5 percent loss.

The dollar index, which tracks the greenback against a basket of major trade-weighted peers, also slipped to 99.206.

U.S. Treasury yields dropped to 2.324 percent. On Friday, it slid to 2.333 percent from Thursday's close of 2.4 percent.

"Right now markets, particularly U.S. equities look stretched from a technical point of view," Rivkin's Woods said.

"Therefore it would not take much to see equities pullback although I would expect any weakness to be fairly limited given the improving company earnings globally accompanied by improving economic fundamentals (despite the dip in the first quarter for the U.S.)"

The euro was little changed on Monday at $1.093, after jumping 0.7 percent on Friday.

Gold prices edged slightly higher to $1,228.59 an ounce, extending Friday's 0.3 percent gain.

Oil prices were steady on Monday as lower U.S. crude inventories and increasing support for continued OPEC-led production cuts soothed concerns about a supply glut.

U.S. crude was flat at $47.85 a barrel.

(Reporting by Nichola Saminather; Editing by Shri Navaratnam)