Wednesday, July 05, 2006

Markets react to N. Korean fireworks

(Source: North Korea nuclear tension - CNN)

This week, the Communist country test-fired seven missiles over the Sea of Japan, including one long-range Taepodong 2 missile—a missile that supposedly has the capability to reach mainland US. However, the Taepodong 2 that was fired this week fizzled out after about 40 seconds, and landed in the Sea of Japan. Japanese officials hurriedly arranged a UN Security Council meeting this morning in order to discuss possible sanctions on Pyongyang for this disconcerting behavior.

South Korean officials have, after analysis of the equipment and personnel located in and around the sites used to test the seven missiles this week, stated that it is highly likely that N. Korea intends to test fire even more missiles this week. (See N korea may fire more missiles - Reuters)

Today, the UN Security Council considered a draft resolution to impose sanctions on the misbehaving country; no action has yet been taken, but the members plan to meet again on Thursday. China and Russia, though strongly opposed to the test firing, expressed their desire for a response short of sanctioning. China is a permanent member of the council with veto power, and is also N. Korea’s main source of food and other aid. (see Key UN members weigh NK sanction - CNN)

Additionally, oil prices and the stock markets have reacted to the tests—many stock markets around the globe closed lower today, and oil has risen to above $75 dollars a barrel, a record high. Analysts commented that the nuclear tensions with N. Korea will frustrate the situation with Iran, and such geopolitical problems will always have an adverse effect on markets. (see Missile tension sends oil surging - CNN)

No comments: