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Sep 22, 4:57 AM EDT

World shares fall on North Korea concerns, China rate cut


AP Photo
AP Photo/Kin Cheung

HONG KONG (AP) -- Most world stock markets fell Friday as investors turned cautious following new U.S. sanctions targeting North Korea and credit rating downgrades for China and Hong Kong.

KEEPING SCORE: European shares were mostly lower in early trading. Britain's FTSE 100 dipped 0.2 percent to 7,251.81 and Germany's DAX was down less than 0.1 percent at 12,594.11. France's CAC 40 rose 0.3 percent. Wall Street was poised to open lower. Dow futures shed 0.1 percent to 22,301.00 and broader S&P 500 futures lost 0.2 percent to 2,496.60.

SANCTIONS: Geopolitical tensions ratcheted up after U.S. President Donald Trump authorized stiffer new sanctions in response to North Korea's nuclear weapons advances, drawing a furious response from Pyongyang. Trump's administration said it would punish foreign companies dealing with the North, including by expanding the Treasury Department's ability to ban anyone from interacting with the U.S. financial system. North Korean leader Kim Jong Un retaliated by calling Trump "deranged" and saying he'll "pay dearly" for his threats, while Kim's foreign minister reportedly said the country might plan to test a hydrogen bomb in the Pacific Ocean.

CHINA RATING: Standard & Poor's downgraded China's credit rating after markets closed Thursday, citing rising debt levels. S&P lowered its sovereign rating by one notch, to A+ from AA-, saying credit growth increased China's economic and financial risks. Then it cut Hong Kong's rating Friday, citing risks posed by close ties between mainland China and the Asian financial center. The downgrade underscores challenges faced by China's Communist leaders as they cope with slowing growth in the world's No. 2 economy.

WEEK AHEAD: After the Federal Reserve Open Market Committee's statement this week signaling it plans to trim its balance sheet and raise rates one more time this year, investors in Asia now turn their attention to key data due next Friday for Asia's two biggest economies. They include a Chinese manufacturing survey and Japanese employment, retail sales and industrial production figures.

MARKET VIEW: "This week has seen Asian markets coming under pressure post-Fed FOMC meeting as the tightening bias squeezed emerging market stocks and currencies," said Jingyi Pan, market strategist at IG in Singapore. She noted next week is also the last in China before a weeklong national holiday, so the "market may be exceptionally susceptible to outflows from retail investors, which could weigh upon price performance."

ASIA'S DAY: Japan's benchmark Nikkei 225 slipped 0.3 percent to close at 20,296.45 and South Korea's Kospi lost 0.7 percent to 2,388.71. Hong Kong's Hang Seng shed 0.8 percent to 27,880.53 and the Shanghai Composite fell 0.2 percent to 3,352.53. Australia's S&P/ASX 200 added 0.5 percent to 5,675.70. Taiwan's benchmark fell and Southeast Asian indexes were mostly lower.

ENERGY: Oil futures were mixed. Benchmark U.S. crude added 13 cents to $50.68 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 14 cents, or 0.3 percent, to settle at $50.55 a barrel on Thursday. Brent crude, used to price international oils, fell 8 cents to $56.01 a barrel in London.

CURRENCIES: The dollar weakened to 111.98 yen from 112.49 yen in late trading Thursday. The euro climbed to $1.1994 from $1.1940.

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