(Bloomberg) -- Stocks in Asia dropped as a selloff in Hong Kong offset a rally in Sydney. The yen strengthened after North Korea test-fired a missile, while the Aussie dollar slumped as the central bank left rates unchanged.
Hong Kong shares sold off sharply just before the midday break, while Japan's Topix erased an early advance as technology giants led declines. Australian equities surged as the nation's biggest banks rebounded from a two-day slump. Gold bounced after its biggest plunge of the year and oil halted an eight-day rally. The yen extended gains after Yonhap News reported North Korea would make an "important announcement" after test-firing a ballistic missile.
The missile launch escalates tensions over North Korea's weapons programs ahead of a meeting between the leaders of the U.S. and China this week in Germany. South Korean President Moon Jae-in said in a national security council meeting that South Korea and the U.S. are analyzing whether the projectile was an intercontinental ballistic missile.
Australia's central bank kept its benchmark interest rate unchanged as it waits to see if wages will respond to a burst of hiring. Sweden's central bank weighs in later on Tuesday. Those decisions follow a more hawkish tilt from some of the world's most influential policy makers last week that spurred some reassessment from investors on policy steps.
The dollar strengthened the most in two weeks Monday after U.S. factories powered up in June at the fastest pace in nearly three years. U.S. growth has been a key factor helping spur a surge in global equities this year and an index of emerging and developed market shares remains within earshot of a record high.
It was far from quiet as the U.S. headed into the July 4 holiday, as erroneous prices of Nasdaq stocks, including some of the world's biggest technology companies, flooded screens. The exchange operator was conducting a test of its pricing data feed that led to some providers, including Bloomberg LP, the parent of Bloomberg News, showing exaggerated moves in shares including Apple Inc. and Microsoft Corp. that never occurred, according to spokesman Joe Christinat.
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Here are some key upcoming events:
- The Federal Reserve on Wednesday releases the minutes from its June 13-14 policy meeting, at which officials raised interest rates.
- China's President Xi Jinping holds talks with Russia's Vladimir Putin.
- German Chancellor Angela Merkel hosts a two-day G-20 summit in Hamburg beginning Friday. President Donald Trump will attend and is expected to hold his first meeting Putin on the sidelines.
- American employers probably added around 175,000 workers in June and wage growth probably strengthened, consistent with a solid labor market, economists project the U.S. Labor Department to report on Friday.
These are the main moves in markets:
Currencies
- The Aussie dollar tumbled 0.6 percent as of 2:21 p.m. in Tokyo, after climbing as much as 0.3 percent. Governor Philip Lowe and his board held the cash rate at 1.5 percent as expected by markets and all 29 economists surveyed by Bloomberg.
- The yen rose 0.3 percent to 113.05 per dollar. The currency tumbled 0.9 percent on Monday.
- The Bloomberg Dollar Spot Index retreated 0.1 percent, after jumping 0.5 percent in the previous session.
Stocks
- Japan's Topix index fell 0.4 percent after an earlier gain of as much as 0.7 percent. Nintendo Co. dropped 4.5 percent to pace declines among technology shares, offsetting gains among auto companies after better-than-expected U.S. car sales.
- Australia's S&P/ASX 200 Index jumped 1.6 percent, with stocks bouncing back after a two-day slump totaling 2.3 percent. South Korea's Kospi index fell 0.7 percent.
- Hong Kong's Hang Seng fell 1.5 percent, and the Hang Seng China Enterprises Index slipped 1 percent. The Shanghai Composite Index dropped 0.5 percent.
- The S&P 500 Index rose 0.2 percent on Monday and the Stoxx Europe 600 Index added 1.1 percent.
Commodities
- West Texas Intermediate crude slipped 0.5 percent to $46.86 a barrel. The contract rose 2.2 percent on Monday, capping an eight-day rally as oil rebounded after falling into a bear market.
- Gold rose 0.4 percent to $1,224.69 an ounce, after dropping 1.7 percent on Monday for its biggest loss of the year amid the dollar's gains.
Bonds
- The yield on 10-year Treasuries rose five basis points to 2.35 percent on Monday, after surging 16 basis points last week. The market is closed Tuesday.
- Australian benchmark yields dropped four basis points to 2.63 percent.
To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net.
To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Jeff Sutherland
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