Global Geo-political Series: Market reacts calmly as North Korea’s IRBM flies through Japan

The financial market is reacting calmly to the latest provocation from North Korea, which fired an Intermediate range ballistic missile (IRBM) through the airspace of Japan. According to reports, the missile reached an altitude of 770 km and traveled 3700km before plunging into the Pacific Ocean. With the latest launch, North Korea has demonstrated that it has the capability to hit the overseas U.S. territory of Guam if it chooses as it was well within the strike range of 3700 km. Reports say Japan’s NHK Television urged residents in Hokkaido and Tohoku regions to take shelter as the projectile passed over Japanese airspace near Hokkaido at around 7.06am local time. The Japanese government will hold an emergency National Security Council session in response to Pyongyang's latest launch. The Japanese government did not try to destroy the missile, according to reports. There's been no news of damage to aircraft and sailing vessels, or falling objects onto Japanese territory. Japan's Prime Minister, Shinzo Abe, however, issued instructions to prepare for unforeseen circumstances by communicating prompt and accurate information to citizens.

The latest launch came after Pyongyang warned Japan that it would sink the island nation if it dances to U.S. tune and vowed to annihilate the United States. The warning came after the 15-member United Nations Security Council (UNSC) which includes Japan unanimously approved a new round of sanctions on Monday, targeting North Korea’s textile exports and its oil imports.

Financial markets, however, reacted more calmly to the latest launch, unlike the last one on August 29th, when the financial markets sharply sold off stocks and piled up into safe haven assets. The safe haven currency, the Japanese yen is at 110.4, down 0.1 percent so far today, and yellow metal gold is trading at $1337 per troy ounce, up less than 0.4 percent so far today.