The White House and Pyongyang are once again strumming taut investor nerves. The announcement of a hydrogen bomb test and retaliatory threats from the US are depressing market sentiment in early morning trading. The news hits markets as participants prepare for a data heavy week.

The possibility of nuclear conflict remains remote under the doctrine of Mutually Assured Destruction. More dangerous to economic health are threatened third party sanctions. Initial rhetoric suggested the US was preparing to ban trade with countries doing business with North Korea. China is the obvious target. While this may play well to US audiences the impact on global trade could be severe. Thankfully more recent US government statements appear to focus on individuals and companies trading with North Korea. Nonetheless gold is higher, the US dollar is lower and share markets futures have edged down by 0.25% - 0.5%.

The sabre rattling comes ahead of a busy week for markets. Weaker US jobs numbers on Friday night provide a backdrop. The ECB makes an interest rate decision Thursday night after the US fed releases its beige book report on Wednesday. China PMIs, Japanese trade and European GDP data feature. Australian investors may focus on the RBA’s rate decision Tuesday and GDP data Wednesday.