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Global Markets Slip on North Korea Threats

Global Markets Slip on North Korea Threats

09/26/2017

 By Marina Force and Kenan Machado 

Global stock markets were broadly lower Tuesday, following fresh threats from North Korea and weakness in technology and health care shares.

The Stoxx Europe 600 was down 0.1% in early morning trade, led by losses in the tech sector. Asia stocks were also lower amid a pullback in shares of tech firms.

North Korea tensions escalated Monday, after the foreign minister warned that his country would shoot down U.S. warplanes even if they were outside the nation's airspace. In the U.S., the White House dismissed assertions about war and the Pentagon brushed off the military threat.

The war of words between North Korea and the U.S. has pressured major indexes and sent haven assets like gold higher a few times since summer.

"Markets do get jolted by these things," said Sat Duhra, a portfolio manager at Janus Henderson Investors, referring to the escalating military tensions. "The impact is on equity risk premium and on sentiment really," he said.

Investor sentiment was already bearish, given the Federal Reserve's plans to shrink its balance sheet which should lead to tighter liquidity, analysts said.

Haven assets had a muted reaction to the latest comments from North Korea. Gold prices and the Japanese yen, which tends to rise when markets stutter, were flat, while the Swiss franc lost 0.3%.

Central bank speeches will share center stage with geopolitical tensions this week, with Federal Reserve Chairwoman Janet Yellen scheduled to talk in Cleveland later Tuesday and Fed Vice Chairman Stanley Fischer speaking Thursday.

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