Article / 11 August 2017 at 7:00 GMT

Morning Markets: North Korea fears keep investors running for cover

Consulting editor / TradingFloor
Norway







MM TABLE

 


Watchlist

  • Germany: CPI (0600 GMT)
  • Spain: CPI (0700 GMT)
  • US: CPI (1230 GMT)

Asia-Pacific stock markets slid on Friday after US president Donald Trump ramped up his warning to North Korea. Investors fled to safe-haven assets, and the US dollar fell against the Japanese yen.

The region's markets were rattled on Friday after Trump said on Thursday his previous warning to North Korea to deploy "fire and fury" may not have been tough enough. The US president's remarks followed further threats from Pyongyang on Thursday about plans for launching missiles towards the US Pacific territory of Guam.

Hong Kong's Hang Seng and South Korea's Kospi index fell more than 2%, and the Shanghai Composite lost 1.8%. Japan's stock market was closed for a holiday.

The JPY strengthened through 109 to the USD as risk aversion spread further. Other Asia-Pacific currencies fell against the greenback amid renewed fears over a possible conflict between the US and North Korea.

The VIX volatility index, known as a "fear gauge", hit its highest level since Trump's election in November as the tensions between Washington and Pyongyang escalated.

 

Market signals

Asian session

  • President Trump's ramped-up rhetoric towards North Korea is making markets nervous
  • US President said threatening "fire and fury" maybe isn't enough
  • South Korea's Kospi fell more than 2% to an 11-week low and the won slid further
  • Australia's S&P/ASX 200 was down 1.4% in early trade
  • Japan's markets were closed for a holiday 
  • Gold prices hit their highest in two months, heading towards $1,300/oz
  • Oil was flat after retreating in the previous session
  • RBA governor Philip Lowe suggested the next rate move is up

Forex ahead

  • USD fell to an eight-week low against the yen

From the Floor

Volatility. "We finally got volatility back into the market – it almost feels like we are alive again," says Garnry.

Test. "Gold is getting close to a key test around $1,295/oz," says Hansen.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1..2..3
US inflation is expected to rise for the first time since February, writes James Picerno, but remain below the Federal Reserve’s goal of 2%. 

Tough talk
Asia was rattled by Trump's rhetoric on North Korea and the US dollar fell to an eight-week low against the Japanese yen, writes the Saxo APAC Sales Trading team.

ASX selloff
The local Australian market's plunge below 5,700 reflects broad and growing geopolitical unease, writes the team at Saxo Capital Markets (Australia).

Mexican standoff
An increasing conflict between tight labour markets and low wages could lead to an acute pivot for the USD and GBP if employers blink first on wages, writes Neil Staines

Big oil, little cash
Russian oil group Rosneft keeps churning out around $5 billion in core earnings every quarter, but has little to show on its bottom line with net debt on the rise, says Nadia Kazakova.

Vegetables

 Friday's macroeconomic data include consumer prices indices 
from Germany, Spain and the US. Photo: Shutterstock

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