gold hurtling higher.LONDON, Aug 29 — World stock markets spiralled lower today after North Korea fired a ballistic missile over Japan, deepening geopolitical worries but sending the euro and
Pyongyang fired the missile over Japan and into the Pacific Ocean, in a major escalation that triggered global alarm and a furious response from Tokyo.
Investor sentiment was also battered by monster storm Harvey in Texas, where it swamped streets and highways with unprecedented rainfall.
“The combination of North Korea’s missile launch and the devastating impact of Harvey is weighing on risk appetite today,” Oanda analyst Craig Erlam told AFP.
“Any increase in geopolitical risk, particularly involving North Korea, triggers a move to safety in markets as investors become increasingly concerned about the potential for things to escalate rapidly.
“The damage caused in Houston is also weighing on sentiment, due to both the sheer devastation it has caused and the uncertainty over the cost and economic impact.”
The shock developments sent investors fleeing for traditional safe-haven assets like the yen, gold, and US treasuries.
The yen surged to four-month dollar peak and precious metal gold forged a path to a nine-month pinnacle at US$1,326.16 per ounce.
The euro topped US$1.20 for the first time since January 2015, as traders also bet on the winding down of eurozone crisis-era stimulus measures and eyed growing economic optimism in the region.
The single currency touched US$1.2070 — which was the highest level since January 5, 2015.
However, Asian and European stock markets crumbled as investors dumped risky equities.
“Equities are firmly in the red after North Korea delivered its biggest provocation in two decades,” said Accendo Markets analyst, Mike van Dulken.
Forex.com analyst Fawad Razaqzada agreed.
“Risk-sensitive stocks have fallen sharply while perceived safe-haven gold, Japanese yen and Swiss franc have soared higher,” he said.
Investors were concerned that the North Korean missile “may lead to retaliation from not only Japan and South Korea but the United States too, especially given the rhetoric Donald Trump deployed a couple of weeks ago,” the analyst said.
‘Flight to quality’
“Rising geopolitical tensions have prompted a flight to quality, benefiting safe haven assets at the expense of risk markets,” NFS Macro analyst Nick Stamenkovic told AFP.
At the same time, the greenback has been hampered by ongoing uncertainty over US President Donald Trump’s tax-cutting plans, as well as North Korea developments.
“Euro/dollar has hit its highest level since the first trading day of 2015 today and broken through the psychological US$1.20 level along the way,” added Erlam.
“It seems geopolitical risk and the devastation in Houston have turned people away from the dollar.”
Key figures around 1340 GMT
New York – Dow: DOWN 0.5 per cent at 21,712.25 points
London – FTSE 100: DOWN 1.0 per cent at 7,324.03
Frankfurt – DAX 30: DOWN 1.8 per cent at 11,905
Paris – CAC 40: DOWN 1.2 per cent at 5,017.44
EURO STOXX 50: DOWN 1.2 per cent at 3,380.05
Tokyo – Nikkei 225: DOWN 0.5 per cent at 19,362.55 (close)
Hong Kong – Hang Seng: DOWN 0.4 per cent at 27,765.01 (close)
Shanghai – Composite: UP 0.1 per cent at 3,365.23 (close)
Euro/dollar: DOWN at US$1.2030 from US$1.2062
Pound/dollar: DOWN at US$1.2947 from US$1.2964
Dollar/yen: UP at 108.59 yen from 108.45 yen
Oil – Brent North Sea: DOWN 56 cents at US$51.42 per barrel
Oil – West Texas Intermediate: DOWN 23 cents at US$46.34
Source: The Malay Mail Online