Global safe-haven trades jump on escalating North Korea tensions

Judith Bessette
Agosto 14, 2017

There have been some markets which have benefitted from the US-North Korean sabre rattling.

North Korea had responded to Trump's previous promise to unleash "fire and fury" with a threat to land missiles near the US Pacific territory of Guam. This is surely welcome news after 2016 was the first year in which overall productivity in the US dropped since 1982.

"North Korea is being used as a reason to sell Japanese stocks, just as it was used yesterday in the U.S.", said Soichiro Monji from Daiwa SB Investments in Tokyo.

The North Korea situation isn't the only thing weighing on stocks. Earlier in the session, it marked its highest since June 8 at $1,288.92 an ounce.

Japan is the world's biggest creditor nation and there is an assumption investors there will repatriate funds should a crisis eventuate.

"This week's beneficiaries have been oil, the Swiss franc and the Japanese yen, and quality government bonds". It is on track for a weekly loss of 2 percent.

In bond markets, the yield on U.S. Treasuries fell, also pressured by the lowered expectations for a Fed move.

Excessive fears surrounding North Korea seemed to have receded, traders say, but activity was subdued with Japanese markets closed on Friday.

Depending on how far the geopolitical stand-off goes, we could see a prolonged period of uncertainty for markets. But with the rhetoric having gone to a different level, the market just can't afford to take that risk'.

The Chinese volatility gauge jumped by the most since January 2016.

Meanwhile, the United States dollar index has been surging since last Friday (August 4), when a better-than-expected U.S. jobs report boosted the greenback.

Xi urges Trump to avoid exacerbating N. Korea tensions
Earlier today the President warned that military plans are " locked and loaded " and urged Kim to "find another path". BEIJING-The North Korean nuclear issue needs a peaceful resolution, Chinese President Xi Jinping told U.S.

Materials, home to gold producers and other resource-based companies, was the only gainer among the index's 10 main sectors and was up 0.6 percent.

The greenback first came under pressure after the Washington Post reported North Korea has.

The Korean won continued to fall versus the dollar, down 0.13 percent to 1,143.5 on Friday for a 1.6 percent decline on the week. 'Pretty remarkable, perhaps even extraordinary, considering, ' said Tim Ash, strategist at fund manager BlueBay.

In terms of forex market movements, the United States currency lost significant ground relative to majors including the yen, sterling and the euro - most notably the latter one - as the news on inflation went public.

The Labor Department said its consumer price index inched up by 0.1 percent in July after coming in unchanged in June.

The tension between North Korea and the USA continues to escalate on a daily basis with each side trading charges against the other and threatening to attack and this has dominated the market headlines over the last few days. They were at 2.201 percent on Friday.

US crude oil futures settled almost 2 per cent lower at $48.59 a barrel, as Russian Federation considered a future output resumption and the Organization of the Petroleum Exporting Countries boosted its July production numbers.

Global benchmark Brent also fell 0.9 percent to $51.44, after Thursday's 1.5 percent drop. It is poised to end the week down 1.7 percent.

Steel and copper prices stayed strong in metals markets.

Away from the geopolitical drama, US inflation data is due at 1330 GMT.

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