Asian shares slip on North Korea nuclear test reports, ECB disappointment

Reuters: Asian shares extended losses on Friday following reports North Korea had conducted a nuclear test, while global stocks and bonds slid on uncertainty over the prospect of further easing from the European Central Bank after it left policy unchanged.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.6% after touching a 13-month high on Thursday, mirroring the slide in the MSCI’s all-country world index. The declines shrank gains for the week to 2.3%.

ECB President Mario Draghi, speaking after the central bank kept its policy on hold as expected on Thursday, said the ECB was looking at options to continue its money-printing programme, but maintained the March end-date for asset purchases.

That disappointed investors who were looking for more immediate action, including an extension or expansion of the current plan, or at least clearer hints of future actions.

“President Draghi’s comment that an extension of the current quantitative easing programme was not discussed led to a hawkish market interpretation of the meeting,” Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

However, inflation levels that remain below target and various other dovish comments from Draghi “indicate that an extension of the quantitative easing programme beyond its March 2017 expiry at its December meeting is likely,” Oliver added. Japan’s Nikkei erased gains to trade 0.2% lower, heading for a flat end to the week, after seismic activity triggered by the suspected North Korean nuclear test.