North Korea Has Markets Nervous But Not Panicked

Paterniano Del Favero
Agosto 12, 2017

Pyongyang said it was examining plans for attacking Guam, a USA territory in the Pacific with a military base.

Hong Kong was down 1.1%.

Manufacturing production in Jun was flat, as predicted, after falling 0.1% in May, while United Kingdom construction output badly missed forecasts fell 0.1% month on month and rose 0.9% year-on-year. In Australia, the S&P/ASX 200 was down 1.13%.

Australian stock futures dropped 1.2 percent and New Zealand stocks slid 1.1 percent. Bond and gold prices, traditional havens for nervous investors, were little changed, and the VIX, a measure of how much volatility investors expect in stocks, fell 3.3 percent following a 44.4 percent jump the day before.

After crashing through 12100, we had expected some kind of psychological support around the round figure of 12000 but even that was not forthcoming as the index continued to drop and it closed the day below 12000 and it looks primed for further losses. On Tuesday, the DAX added 0.3 per cent, the CAC 40 gained 0.2 per cent and the FTSE rose 0.1 per cent. The Russell 2000 index of smaller-company stocks gave up 4.02 points, or 0.3 percent, to 1,410.15.

They suggest the US and China, a North Korean ally, could work together to de-escalate the situation.

Meanwhile, investors moved money into assets seen as safe havens.

In the U.K, issuance of new Gilts is scheduled to resume August 23.

Trading will also be moderated by a lack of legislative news from Washington as the U.S. Congress is in recess until Sept 5. "Hard to assess political risk is now intruding on this scenario". Yields on 10-year gilts dropped -2 bps to +1.13%, the lowest in six-weeks.

The financial index had risen earlier in the session after the Labor Department said US job openings, a measure of labor demand, jumped to a record high in June to the highest level since December 2000.

The NASDAQ Composite Index and Dow reversed their direction after President Trump's comments on North Korea.

The ZAR is down outright ($13.4470), reversing yesterday's gains, as President Zuma has survived another no-confidence vote (his seventh).

On the currency front, the USA dollar is trading at 108.82 yen compared to the 109.20 yen it fetched at the close of NY trading on Thursday.

Data overnight from China showed that China's producer price gains held steady on surging commodity prices, as demand stayed resilient and the government's drive to reduce industrial capacity takes hold. The NFIB small business optimism index rose to 105.2 in July from 103.6 in June.

Excluding food and energy prices, core consumer prices still crept up by 0.1% in July, matching the increases seen in the three previous months. It is not investment advice or a solution to buy or sell securities.

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