Stock market: Fears ease over North Korea
Stock market futures in US edge up as tensions ease over Kim Jong Il's passing. Asia markets close lower, but stock market in Germany, Britain, and France recover.
(Page 2 of 2)
Those worries are most acute in South Korea and Japan, which have often been the targets of North Korea's mercurial military and diplomatic actions.Skip to next paragraph
Subscribe Today to the Monitor
"We're seeing deeper negative sentiment in some markets," said Dariusz Kowalczyk, strategist at Credit Agricole CIB, in Hong Kong. "Basically this is because risk aversion on the geopolitical front has increased given that there's a transition of power in a relatively unstable country. So we're seeing an impact on equities, currencies."
South Korea's military and police went on alert and President Lee Myung-bak, convened a national security council meeting. Japanese leaders said they were watching markets closely and in contact with the U.S., Kyodo News Agency reported.
Kim was ailing after suffering what is thought to have been a stroke in 2008 and died at age 69 on Saturday.
North Korea's official Korean Central News Agency identified his third son, the twenty-something Kim Jong Un, as the "great successor" to the man known officially as the "Dear Leader."
But even with the younger Kim designated as his father's successor, and already filling high-ranking posts, some experts fear a behind-the-scenes power struggle or nuclear instability.
Fitch Ratings said it did not view Kim's death "as a trigger for negative action on South Korea's sovereign ratings in itself."
"For now, it's much too early to say risks have materially increased, but clearly we will keep the situation under close review," said Andrew Colquhoun, head of Fitch's Asia-Pacific sovereigns.
Still, barring unexpected developments in Pyongyang the impact of Kim's death on markets is likely to be passing, analysts said.
"In the short term there will be some psychological uncertainty but I think things will go back to the fundamentals," said Steven Leung, director of institutional sales at UOB-Kay Hian Ltd. in Hong Kong.
Benchmark oil for January delivery was up 51 cents at $94.04 a barrel in electronic trading on the New York Mercantile Exchange.