Investing.com - Here are the top five things you need to know in financial markets on Friday, September 15:
1. North Korea launches another missile
Markets were jittery following news North Korea fired a missile over Japan into the Pacific Ocean late Thursday. It was the peninsula's second missile launch over Japanese territory in just over two weeks.
Japan reacted by saying that Pyongyang has “no bright future” and called for an emergency meeting of the U.N. Security Council.
U.S. Secretary of State Rex Tillerson called for the international community to take “new measures” against North Korea, singling out Russia and China as the countries best placed to apply pressure on the regime.
Demand for safe-haven assets, such as gold, the yen and Swiss Franc initially reacted to the upside as the geopolitical tension reemerged, but calm slowly returned to markets with all three giving back most gains.
2. Global stocks show calm over missile launch
Global stocks appeared to hold up under the pressure from the latest military move from North Korea, recovering from an earlier dip as investors digested the news.
U.S. futures pointed to a flat to lower open Friday as investors remained cautious but shrugged off the latest show of force from Pyongang. At 5:51AM ET (9:51GMT), the blue-chip Dow futures slipped 4 points, or 0.02%, S&P 500 futures dropped 3 points, or 0.11% while the Nasdaq 100 futures gave up 6 points, or 0.10%.
Elsewhere, European bourses also made a recovery from the initial risk averse reaction, pulling off intraday lows and suggesting that markets are becoming more accustomed to escalating tensions from North Korea. At 5:53AM ET (9:53GMT), the European benchmark Euro Stoxx 50 lost 0.11%, Germany’s DAX fell 0.03%, while London's FTSE 100, punished by rate hike fears and a terrorist incident in the UK’s capital, led losses, down 1.05%.
Earlier, Asian shares closed mostly lower Friday in their initial reaction to the news. China’s Shanghai Composite ended with losses of 0.53%.Japan’s Nikkei 225 pared earlier gains to end with a 0.51% rise.
3. Slew of data to drive U.S. session
Amid a slew of data to be released on Friday, investors will likely focus on the Commerce Department’s release of August retail sales at 8:30AM ET (12:30GMT). The consensus forecast is that the report will show retail sales inched up 0.1% last month, after a stronger 0.6% advance in the preceding month.
Core sales are forecast to gain 0.5%, matching July’s increase.
Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.
Besides retails sales, markets will also keep watch on the industrial production for August and preliminary Michigan consumer sentiment for September out at 9:15AM ET (13:15GMT) and 10:00AM ET (14:00GMT), respectively.
Ahead of the data, he U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dropped 0.16% at 91.89 by 5:54AM ET (9:54GMT).
4. Bitcoin continues slump as second exchange announces closure
Bitcoin sank deeper into bear market territory Friday as the fallout from China’s plans to shut down domestic cryptocurrency exchanges continued to take its toll.
A senior executive at China's state-backed internet finance body said on Friday "stateless" digital tokens such as bitcoin posed risks as they could be used for illegal actions, and rules are needed to support the development of "legal" digital currencies.
ViaBTC, a smaller Chinese bitcoin exchange, on Friday became the second to announce it will close at the end of September.
That came after BTCChina, a major Chinese bitcoin exchange, said on Thursday it would stop all trading from September 30, citing tightening regulation.
With losses of around 5% on Friday, bitcoin prices are now down more than 30% from the record high of $4,969.00 set on September 2.
Even with those losses, bitcoin prices have still more than tripled in value since ending 2016 at $966.60.
5. Cable breaks 1.35 on rate hike odds
The pound busted through the $1.35 psychological level on Friday for the first time since June 27, 2016, just days after the Brexit vote, as investors were convinced that the first rate hike by the Bank of England since before the financial crisis may arrive in November.
Though the BoE kept rates on hold Thursday, the Monetary Policy Committee indicated that the time for “some withdrawal of monetary stimulus is likely to be appropriate over the coming months".
MPC member Gertjan Vliegh repeated that time frame in a speech delivered on Friday.
“Until recently, I thought the appropriate response of monetary policy was to be patient, given modest growth and subdued underlying inflationary pressure,” he said.
“But the evolution of the data is increasingly suggesting that we are approaching the moment when bank rate may need to rise,” Vliegh explained.
GBP/USD jumped 1.33% to 1.3574 by 5:55AM ET (9:55GMT).
Separately, pound strength was unfazed by an explosion on the London subway early Friday. British counter-terrorism officers were on the scene in Parsons Green where the incident took place on the London underground train and UK Prime Minister Theresa May was scheduled to give a briefing at 8:00AM ET (12:00GMT).