In a disturbing escalation of brinksmanship, North Korea detonated its sixth and largest nuclear device yesterday, triggering an earthquake of 6.3 on the Richter scale in magnitude. Pyongyang confirmed that the device tested was a hydrogen bomb and has been estimated at ten times more powerful than any other previous test. Most worryingly was the comment that the device was capable of being mounted on a ballistic missile.
As you would expect, there has been strong condemnation from political leaders across the globe, including Xi Jinping and Vladimir Putin, both of whom confirmed at the Brics summit in China to “appropriately deal with” this latest test and were “committed to upholding global peace and contributing to the international security order”. Donald Trump was more succinct, declaring the test to be “hostile and dangerous” and hinted at potentially terminating the US-South Korea trade deal. Whether this will be a precursor to an actual attack on North Korea, we will have to wait and see. Financial markets’ concerns over previous missile tests have faded rapidly and whether this latest test is dismissed as easily makes for worrying times indeed.
To finish this week’s analysis we have another update on Brexit. There is a distinct lack of momentum to the negotiations and no decisive progress has been made on the third round of talks. The key deadline being worked towards is the EU27 leaders’ summit on 19th October, where a decision has to be made whether sufficient progress has been made to switch the talks to trade negotiations. The EU’s chief negotiator, Michel Barnier, confirmed that “at the current state of progress we are quite far from being able to say sufficient progress has taken place”. It would seem neither side wish to move first on the big political issues and it continues to be a game of who blinks first.
In the meantime, we continue to be cognisant of the political maelstroms across the globe, while avoiding any short-term reactions.