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Safe haven demand higher on North Korean threats

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The FTSE is down 0.20% in early trading this morning following a fresh escalation in the war of words between North Korea and the US, with the negative baton being taken up by Asian bourses overnight.

Accendo Markets analyst, Mike van Dulken commented “This has perked up safe haven demand for Gold, Bonds, the Yen and Swiss Franc, although relative calm among risk assets suggests many expect the move to again be short-lived.”

ADS Securities analyst, Konstantinos Anthis added “The Dollar was lower against both [Gold and the Yen] but gained versus the euro and the pound as the flight to safety drove traders away from the European majors.”

Aside from the political issues, the dollar will also take direction today from the US Consumer Confidence report and the Federal Reserve’s Chairwoman, Janet Yellen speaking in public. Konstantinos Anthis suggested “Last week the greenback got a much needed boost for the Fed meeting that hinted on one more rate hike by the end of the year but the rally has since fizzled out.”

“The Consumer Confidence report is expected to print lower this month and this could be another reason why traders will want to hear a more bullish tone from Yellen”

European markets were down too in early trading, with the Dax and CAC both dropping 0.2% despite the Euro’s losses against both the Pound and Dollar. The far right progress seen in Sunday’s German election and Angela Merkel’s coalition dilemma appear to be weighing heavily this week.

Spreadex analyst, Connor Campbell commented “The only bit of news out of the region this morning didn’t help, with the latest German import prices reading missing estimates at 0.0% – though that was an improvement on the previous month’s -0.4%.”

The US equity markets closed in the negative last night as perceived sector rotation dented the Tech sector, while a re-escalation of rhetoric from North Korea hurt risk appetite. Mike van Dulken noted “the Nasdaq underperformed, suffering its worst session in three weeks, while the S&P 500 dipped on the Tech sector’s worst performance since mid-August.”

“The Dow Jones also fell as weakness from Visa, Boeing and McDonald’s offset Home Depot and ExxonMobil gains.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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