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giftedviz.com June 21, 2018


Wall Street set to open lower as tensions with North Korea mount

13 August 2017, 03:39 | Austin Hogan

With President Donald Trump warning North Korea of "fire and fury", investors have become concerned that the war of words between Washington and Pyongyang could spiral out of control. Britain's FTSE 100 sank 1.1 percent to 7,414.

ANALYST TAKE: "We're seeing significant risk aversion in the markets on Wednesday, with the escalation in tensions between the USA and North Korea triggering moves into safe haven assets", said Craig Erlam, senior market analyst at OANDA.

"We saw a tentative recovery in risk appetite yesterday from the sell off inspired by North Korea but I think, justifiably that move is fading a little bit today", said Saxo Bank's head of FX strategy John Hardy.

The Swiss franc, by contrast, was on track for its biggest single-day rise against the euro in more than 2 1/2 years.

"It's awesome when you consider the headlines just how calm the equity markets are, how they've taken things in their stride", said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. "The global economy is really on some firm footing", he said.

Wall Street closed sharply lower, with Dow Jones down over 200 points on Thursday. The Shanghai Composite Index lost 0.2 percent to 3,275.57 and Hong Kong's Hang Seng was off 0.3 percent at 27,757.09. Futures pointed to further declines on Wall Street, with S&P 500 futures down 0.4 percent and Dow futures falling 0.3 percent.

MARKETS OVERSEAS: Major indexes in Europe were mixed.

Traditional safe-haven currencies including the Swiss franc and Japanese yen rose against the US dollar.

Insurers and banks, which invest in higher-yielding products such as foreign bonds, underperformed after U.S. Treasury yields fell on Wednesday, with the yields on the benchmark 10-year note hitting a six-week low. "Tensions are still high and not going away at the moment".

Data showed USA producer prices unexpectedly fell in July, recording their biggest drop in almost a year, while another set showed the number of Americans filing for unemployment benefits unexpectedly rose last week.

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The Swiss franc rose 0.01 percent versus the greenback, the most since late June, at 0.96 per dollar.

In commodities, US crude CLcv1 fell 0.67 percent to $49.23 per barrel and Brent LCOcv1 was last at $52.58, down 0.23 percent on the day. It was down 0.1 percent at 109.07 yen, after retreating 0.8 percent on Thursday. Japan is the world's biggest creditor country and there is an assumption that investors there will repatriate funds in a crisis.

The lightly weighted utilities sector (+0.3%) was the only group to finish the day in positive territory.

North Korea could just be an excuse for people to cash in winning stocks, especially tech companies like Apple and Facebook.

Analysts said yields, which move inversely to prices, could fall further if the tensions build further, even if central bankers in the United States continue to talk of raising interest rates of scaling back stimulus programmes.

Shares of Michael Kors ended up 21.5 percent, after the luxury goods maker raised its full-year revenue forecast.

"If the US and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so", the editorial's authors said. Brent crude, used to price global oils, rose 20 cents to $52.10 a barrel in London.

Gold rose 0.6 per cent to $1,268 an ounce.

Spot gold added 1.3 percent to $1,277.15 an ounce.

Weakness in U.S. Treasury yields may also be supporting the yen, Sweeting said.



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