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- War of Words US and North Korea Tensions
News & AnalysisMarkets are rattled by US- North Korea tensions as Trump vows to respond to North Korea nuclear threats with “fire and furry”. The senior administration officials and Secretary of State Rex Tillerson tried to find different ways to explain the President’s comments and play down the tough talk.
Trump reinforced his threats stating “they should be very nervous, because things will happen to them like they never thought possible”. The standoff has unsettled the financial markets worldwide.
The DOW dropped by 200 pips and S&P 500 fell to sessions lows. The CBOE Volatility Index, the best gauge of fear in the market spiked by 45%.
Source: GO Markets MT4
The demand for safe havens has increased with the rising tensions. Investors have switched to gold, yen, swiss franc and government bonds. USDJPY dropped to record low and Gold rose to its highest level in almost 2 months.
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Source: GO Markets MT4
The risk sentiment gets hit by the escalating geopolitical tensions as Japan and South Korea also warned of a strong response if North Korea launches missiles toward Guam. Trump intensifies its warnings to North Korea as he believes that even if Russia and China are backing the UN sanctions, it would not be enough or effective as negotiations have been going on for years. The Nikkei index fell since the “war of words” started.
Source: GO Markets MT4
Chinese media warn that the US is engaging in dangerous confrontations. “The US is more powerful than North Korea, but in a real showdown I don’t think they would beat North Korea. There is a Chinese saying: ‘A man with nothing to lose, doesn’t fear a man with something to lose” Hu Xijin, outspoken editor of the Global Times said.
The coming days will be crucial. Investors will be looking for a “diplomatic outcome” rather than militaristic conflict.By: Deepta Bolaky
GO MarketsThe information provided is of general nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information provided, you should consider whether the information is suitable for you and your personal circumstances and if necessary, seek appropriate professional advice. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Past performance is not an indication of future performance. Go Markets Pty Ltd, ABN 85 081 864 039, AFSL 254963 is a CFD issuer, and trading carries significant risks and is not suitable for everyone. You do not own or have any interest in the rights to the underlying assets. You should consider the appropriateness by reviewing our TMD, FSG, PDS and other CFD legal documents to ensure you understand the risks before you invest in CFDs. These documents are available here.
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