Stocks in the Asia-Pacific region are experiencing a mixed start of trading on Monday (15/05), while safe haven assets (Japan's yen, US treasuries and gold) continue their gains. Investors are concerned about the size of the ransomware attack, a new missile test that is conducted by North Korea over the weekend, while Asia still needs to digest weaker-than-expected economic data from the USA that was released late last week.
Global Cyber Attack
There is concern that the cyber attack can make more victims as many workers will start their computers on Monday morning. Malicious software has been proliferating around the globe, locking up all data on computers and demanding a payment in bitcoins to recover the data. Already hundreds of thousands of computers in more than 150 countries have been infected by this malicious software. The world has never before seen a ransomware attack like this.
North Korean Missile Test
On Sunday (14/05) North Korea successfully tested a mid-to-long range missile test (which reportedly ended in the sea near Russia after flying 787 kilometers), aimed at checking the capability to carry a large scale heavy nuclear warhead. The country is believed to be developing weaponry that can reach mainland USA. The latest test will surely increase tensions. In response to the test US President Donald Trump called North Korea a flagrant menace and urges far stronger sanctions against the isolated nation. Japanese Prime Minister Shinzo Abe also labeled the test "unacceptable".
North Korea's missile test violates UN Security Council resolutions and therefore the United Nations Security Council is set to meet on Tuesday.
Wall Street Performance
The performance of US stocks on Friday (12/05) are also not supporting Asia-Pacific markets today. On Friday most US stocks fell due to the release of bleak US economic data, hence curbing risk-appetite. US retail sales only rose by 0.4 percent (from the previous month) in April 2017, below expectations. Meanwhile, the US consumer price index missed expectations, rising 0.2 percent in April 2017.
The US economy grew at a bleak 0.7 percent (y/y) rate in Q1-2017. This result was partly attributed to the weakest increase in US consumer spending in more than seven years.
Weak US data also raise doubts over whether the Federal Reserve can maintain its hawkish stance this year.
Crude Oil Price
Crude oil halted gains on Monday (15/05) on rising US crude inventories. Earlier, oil experienced a rally to the near-USD $48 a barrel level on signs of growing support for continued OPEC-led production cut agreements.