S&P futures retreated along with European and Asian shares with tech, and Apple supplier shares leading the drop while safe havens such as gold and the yen rose, as the war of words between U. S. President Donald Trump and Kim Jong Un escalated and North Korea threatened to launch a hydrogen bomb, leading to a prompt return of geopolitical concerns. Trade focus now turns to a planned speech by Theresa May on Brexit (full preview here).
As reported last night, the key overnight event was the latest threat by North Korea that its counter-measure may mean testing a hydrogen bomb in the Pacific, according to reports in Yonhap citing North Korea’s Foreign Minister. North Korea’s leader Kim said North Korea will consider “corresponding, highest level of hard-line measure in history” against US, while he also stated that President Trump’s UN speech was rude nonsense and demonstrated insanity and inhumanity which confirmed North Korea’s nuclear and missile advances are on right path and will continue to the end. There was more on the geopolitical front with the Iranian President
informing armed forces that the nation will bolster its missile
capabilities, according to local TV.
As a result, treasury yields pulled back and the dollar slid the most in two weeks following North Korea’s threat it could test a hydrogen bomb in the Pacific Ocean. Europe’s Stoxx 600 Index edged lower as a rout in base metals deepened, weighing on mining shares. WTI crude halted its rally above $50 a barrel as OPEC members gathered in Vienna.
US stock futures pulled back 0.1% though markets were showing growing signs of fatigue over the belligerent U. S.-North Korea rhetoric. ‘North Korea poses such a binary risk that it’s very hard to price, and at the moment investors just have to look through it,’ said Mike Bell, global market strategist at JP Morgan Asset Management. Despite the latest jitters, MSCI’s world equity index remained on track for another weekly gain, holding near its latest record high hit on Wednesday as investors’ enthusiasm for stocks showed few signs of waning.
This post was published at Zero Hedge on Sep 22, 2017.