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Nuclear Test in North Korea Signifies Trouble for Stocks in September

September is a much dreaded month or much maligned, depending on what you believe, for investing in the stock market.

Those who indulge in crystal ball gazing based on historical data will point out that this month is the only one out of the 12 in a year in which the Dow Jones Industrial Average has been lower on average over the past 20, 50, and 100 years.

What is clear though is that this September has got off to a wobbly start, thanks to the bellicose of North Korea. The country conducted sixth nuclear test that generated tremors five to six times as powerful as its previous nuclear test. This came just hours after Pyongyang claimed it had developed a hydrogen bomb that could be loaded into a long-range missile.

With the Kim Jong Un regime escalating tensions with the United States, nervous investors are apt to sell risky investments and seek safe havens in US Treasuries or the Japanese yen. This is likely to trigger a global selloff in equities and bonds when market resumes today.

Last week, US equity markets rebounded fairly quickly after Mr Trump did not pronounce any radical action against North Korea following its launch of a missile that flew over Japan beyond saying that all options are on the table.

On the economic front, the investment temperature is rather more benign, judging by last Friday's labour and manufacturing data in the US. While US non-farm payrolls have come in well below expectations - with 156,000 jobs added last in August after two straight months of strong gains - the pace of the increase is enough to prod the Federal Reserves to start trimming its bloated balance sheet.

Moreover, the key US manufacturing sector accelerated in August at its fastest pace in six years, driven by gains in output and employment. A rollback of the Fed balance sheet will drain the financial system of excessive liquidity that has kept interest rates artificially low since the 2008 global financial crisis.Higher interest rates are thought to be good for banks.

Japanese Yen Climbed Up While Stocks Plummet 

The dollar was marked down as deep as 109.22 yen at the opening, off a whole yen from late on Friday, but there was no follow-through selling and it was last at 109.84. 

Japan is the world’s largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis, thus pushing up the yen. Many wonder, however, if Japanese assets would really remain in favor if an actual war broke out in Asia.

Japan's Nikkei did not take the news well, losing 0.9 percent. MSCI's broadest index of Asia-Pacific shares outside Japan. South Korea's main index .KS11 down 0.6 percent.

Futures on 10-year U.S. Treasuries climbed 5 ticks, while yields on Japanese 10-year government debt rallied to their lowest since last November. E-Mini futures for the S&P 500 dipped 0.3 percent, though U.S. markets will be closed on Monday for the Labor Day holiday.

The dollar slipped to 0.9610 Swiss francs from 0.9646, and was off 0.15 percent against a basket of currencies at 92.674. Gold hit a 10-month high and was last up 0.6 percent at $1,332.20. 

The euro was a shade firmer at $1.1880 with investors wary ahead of a European Central Bank meeting on Thursday. There have been reports some at the ECB are unhappy with the euro’s strength and are in no rush to signal the start of a tapering in its massive balance sheet.

In the oil market, prices were mixed as shutdowns of U.S. production following Hurricane Harvey were balanced by an expected downturn in crude demand as the storm knocked out refineries along the Gulf of Mexico.

Brent crude eased 29 cents to $52.46, while U.S. crude gained 14 cents to $47.43 a barrel.

CEFC will Invest  $20 Million on Lithium Mine to Support Power Stability in Australia

Clean Energy Finance Corporation will invest on a lithium mine to support  power stability in Australia as the market increasingly dependent on variable wind and solar power.

The government will make a $20 million investment as part of a $132 million secured bond issued by an offshoot of Pilbara Minerals, an ASX listed company that hopes to extract lithium and supply the market for lithium ion battery storage products for electricity and electric vehicles.

The lithium concentrate supplies to be produced by this project will help build Australia’s capacity to supply much needed resources for the clean energy technologies that are set to play a vital role in increasing the use of renewable in our future energy mix.

The move comes as the government looks to prove it is being technology neutral in its efforts to beef up power supply in tackling over whether that should include subsidies for coal fired power.

The proceeds of the bond issue together with $80 million raised in a share sale will underpin the $234 million required for the project's first stage of development. Construction is expected to start in early 2018.

The government also awarded a $2 million grant to Australian researchers developing ultra thin, screen printed batteries for use in both large scale energy storage and in cheap, portable devices.

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