Australian shares eased on Tuesday, tracking falls on Wall Street and markets across Asia after North Korea fired a missile that passed over northern Japan, sending jitters through the region.
U.S. stock futures opened sharply lower overnight as investors reacted to the launch, which follows a North Korean threat earlier this month to fire missiles at Guam, a U.S. held Pacific island. [.N]
"There's real worries about what's happening in the United States, with North Korea, and that's adding to geopolitical tensions," said Mathan Somasundaram, a market portfolio strategist with Blue Ocean Equities.
The S&P/ASX 200 index (xjo) fell 1 percent, or 56.29 points, to 5,653.6 by 0211 GMT, led by declines in the financial sector.
Australia's big four banks lost around 1.5 percent each, with Commonwealth Bank of Australia (CBA) falling as much as 1.8 percent to a nine-month low.
CBA extended Monday's losses after the Australian Prudential Regulation Authority (APRA) said it would establish an inquiry into the bank, following its alleged breaches of money-laundering and counter-terrorism finance rules.
The materials index .AXMJ lost 0.5 percent with metals declining on profit taking, while gold prices rose to the highest in nine-and-a-half months on the mounting geopolitical tensions. [MET/L] [GOL/]
Gold miner Newcrest Mining Ltd (NCM) rose as much as 3.4 percent, while Northern Star Resources Ltd (NST) also gained up to 3.4 percent, hitting a two-month high.
"Spot gold had a big move last night, about 1.5 percent. This morning, when we heard about North Korea, it moved another half percent. There's definitely a bit of a risk-off ... so gold and bonds are doing better," Somasundaram said.
Among big miners, Rio Tinto (RIO) fell 0.8 percent and BHP Billiton (BHP) fell 0.7 percent.
New Zealand's benchmark S&P/NZX 50 index (nz50) lost 0.7 percent, or 55.55 points, to 7,771.32.
The telecommunication sector was the biggest drag on the index as Chorus Ltd (CNU) fell to a five-month low after it reported weak annual results on Monday that missed analysts' estimates.
Industrial shares fell as Auckland International Airport Ltd (AIA) and Air New Zealand Ltd (AIR) fell as much as 1.2 percent and 1.7 percent respectively.
The benchmark index is on track to post its fourth consecutive loss.
