European equities are expected to open lower on Wednesday as geopolitical risks posed by North Korea's latest nuclear test and geopolitical tensions in the Middle East increase uncertainty.European markets are set for a gloomy start to the trading day with news of a hydrogen bomb test conducted by North Korea overnight dominating sentiment in Asia. North Korea announced the test following reports of a 5.1 magnitude earthquake. News of the test pushed Japanese and South Korean stocks lower in Asia overnight, spurring investors to instead seek safer assets.
The market again began massive purchases of JPY, which caused a decline in pairs USD / JPY, AUD / JPY and EUR / JPY. Today PBOC again lowered the rate of CNY 6.5314 to 1 USD, after yesterday's decline to 6.5169. At the moment the mood of capital markets is rather negative: Nikkei 225: -1.39%; Hang Seng: -0.89%; S & P / ASX 200: -1.25%; Shanghai Composite: +0.69%; Topix: -1.23%; Toyota Motor Corp. and Sony Corp. losing nearly 2%.
Investors will also be watching for developments in relations between Saudi Arabia and Iran.
On the data front, Markit's euro zone final composite purchasing manager's index (PMI) for December is published.
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