Shares in Asia fell on Tuesday as North Korea upended a recent lull in tensions with a missile test that reached Japanese territory, with a U.N. Security Council meeting scheduled later in the day and reports the U.S. was bringing more military hardware into the region.
North Korea launched a ballistic missile that flew over Japan on Tuesday. The missile headed in the direction of the Tohoku region before falling in the sea, Japan's NHK said. The last time a projectile from the hermit state flew over Japan was in 2009, according to Reuters.
"North Korea's firing of more missiles, this time over Japan, could be the trigger for another round of global risk off," warned ING Asia Head of Research Rob Carnell in a note.
Japan's Nikkei 25 fell 0.74%, while the South Korea Kospi index dropped 1.55%. In Australia, the S&P/AX 200 dipped 0.98%.
In Greater China, the Hang Seng index fell 0.37%, while the Shanghai Composite bucked the trend, up 0.13%.
Overnight, U.S. stocks closed mixed on Monday, after a slump in energy and financials weighed on the broader market as traders mulled over the impact of Tropical Storm Harvey, while Federal Reserve chair Janet Yellen's disappointing remarks on Friday dashed hopes of a rate hike later this year.
The Dow Jones Industrial Average closed lower at 21,808. The S&P 500 closed 0.05% higher, while the Nasdaq Composite closed at 6283.02, up 0.28%.
Tropical Storm Harvey brought flooding to Houston, the capital the US oil & gas industry, disrupting refining activity while sparking fears over an uptick in crude supplies, pressuring crude prices to drop to nearly one-month lows. It is estimated that approximately 331,370 barrels of oil per day (bpd), or 18.94%, of the current oil production of 1,750,000 bpd in the Gulf of Mexico has been shut in, according to an update from the Bureau of Safety and Environmental Enforcement on Monday.
Shares of refinery stocks rose, however, as supply disruptions pushed gasoline prices up more than 2%. Meanwhile, financials - mostly banks - extended losses following Fed chair Yellen's speech on Friday which offered no insight into the central bank's thinking on future monetary policy, reducing expectations for a third rate hike later this year. Higher interest rates are seen as boon for banks, boosting net interest margin - the difference between the interest income generated by banks and the amount of interest paid out to their lenders.