TOPIX

S&P futures are slightly lower (ES -0.1%) as traders paid little attention to the latest missile test by North Korea on Friday, with shares and other risk assets barely moving, gold lower and focus rapidly returning to when and where interest rates will go up. Most global market are mostly unfazed, and the Korean Kospi actually closed up 0.4%, by the latest geopolitical escalation after a North Korean ballistic missile flew far enough to put the U.S. territory of Guam in range. European stocks edged fractionally lower while Asian shares advanced.

Authored by Ralf Zimmermann, Head of Equity Strategy at Bankhaus Lampe KG,

Let’s forget for ten minutes the upcoming Q3 reports (supportive for stocks), US policy risks (probably the biggest medium-term risk for stock markets), hurricane-related diversions and North Korean rumblings - and turn to a pretty fundamental issue, most likely the biggest one in contemporary capital markets: Central bank interventions in and manipulation of capital markets. 

For the first day in three S&P futures have pulled back modestly from record levels as some investors cautioned that gains had gone too far, too fast, European shares are mixed while Asian equities extended their longest rising streak in almost two months as continued gains in Japan and India offset the losses in Hong Kong. The dollar ended a two-day advance as TSY yields dropped in what has become a close correlation trade (see below) while oil and gold rose, perhaps in response to the ongoing plunge in bitcoin.

World stocks hit new record highs on Tuesday amid a continuation of Monday's risk-on theme which unleashed a dramatic relief rally on easing North Korea tensions and signs that Hurricane Irma caused less damage than feared (which according to Keynesians should be GDP negative). The MSCI All-Country World Index gained 0.2%, hitting the highest on record with a fifth consecutive advance.

While ECB President Mario Draghi faces his own German-bond-market constraints in his hubristic bond-buying-bonanza, cornering him to taper sooner than later; the Bank of Japan appears to have thrown every textbook out of the window and cranked their plunge-protection to '11', as Bloomberg reports, The Bank of Japan now holds 75% of the nation's ETFs.