Good morning! Here’s what you need to know in markets on Monday.
1. Global geopolitical tensions continue to rise after North Korea carried out what is believed to be its biggest ever nuclear weapons test. North Korea claimed that leader Kim Jong Un had inspected a hydrogen bomb meant for a new intercontinental ballistic missile. South Korea’s military said Sunday that North Korea is believed to have conducted its sixth nuclear test after it detected a strong earthquake.
2. President Donald Trump issued a set of tweets Sunday morning attacking the far-east state. “North Korea has conducted a major Nuclear Test. Their words and actions continue to be very hostile and dangerous to the United States,” Trump tweeted.
3. Trump also threatened to cut off all US trade with any country that maintains economic ties to North Korea, a not-so-veiled threat to the country’s primary trading partner, China.“The United States is considering, in addition to other options, stopping all trade with any country doing business with North Korea,” Trump wrote in another tweet.
4. British Foreign Secretary Boris Johnson has said, “all options are on the table” after North Korea’s latest nuclear test. Johnson said the ramifications of the test, being able to fit a nuclear warhead to a missile would present a “new order of threat” from Kim Jong Un’s regime. He condemned the “reckless” behaviour of the North Korean government.
5. Japan’s Nikkei share average stumbled on Monday after North Korea conducted its most powerful nuclear test yet, and some traders expect more selling once the U.S. market reopens after a holiday. The Nikkei fell close to 1% to 19,510, slipping from Friday’s two-week high while the broader Topix declined by roughly the same margin.
6. British businesses grew steadily over the last three months, according to the Confederation of British Industry (CBI)’s latest survey. Output was +14% in the three months to August, according to the CBI’s survey of 716 companies in the manufacturing, distribution, and services sectors. The result is similar to the three months to July, when the CBI’s growth survey recorded a reading of +16%.
7. Extensive damage left by Hurricane Harvey in Texas is estimated at between $US150 billion to $US180 billion, Texas Governor Greg Abbott said on Sunday, which could be more than 20 times bigger than the $US7.85 billion initial funding requested by U.S. President Donald Trump from Congress last week. “The geographic area and the population affected by this horrific hurricane and flooding is far larger than in Katrina, which required more than $US120 billion,” the governor said in an interview with Fox News.
8. China will provide 500 million yuan ($US76.4 million) for a BRICS economic and technology cooperation plan, Chinese President Xi Jinping said on Monday. Xi also told a plenary session at a BRICS leaders’ summit in the southeastern Chinese city of Xiamen that China would give $US4 million for projects at the BRICS countries’ New Development Bank.
9. If the Spanish region of Catalonia breaks away from Spain in a so-called “Catalexit”, it would plunge the region into a long period of uncertainty and could end up having negative effects that “proportionally exceed” those of Brexit according to Dutch bank ING. “As with Brexit, we believe that any Catalexit would plunge the region into a long period of uncertainty and would most probably be negative for the private sector,” ING economist Geoffrey Minne wrote.
10. Taiwan’s Premier Lin Chuan has offered his resignation, a government spokesman said on Monday. Lin’s departure was expected because of declining public support for President Tsai Ing-wen.