North Korean Threats Pressure Global Markets
September 22 2017 - 10:08AM
Dow Jones News
By Georgi Kantchev
Global markets were under pressure Friday after fresh threats
from North Korea revived the geopolitical fears that engulfed
markets earlier this month.
The Dow Jones Industrial Average gained 1.2 points, or less than
0.1%, to 22360 shortly after the opening bell. The S&P fell
less than 0.1%, while the Nasdaq Composite declined 0.1%.
The Stoxx Europe 600 index rose 0.1% after falling in earlier
trading, while bourses across Asia finished mostly in the red.
North Korean Foreign Minister Ri Yong Ho said late Thursday in
New York that the country may consider a nuclear test of
"unprecedented scale" in the Pacific Ocean.
Those comments came after North Korean leader Kim Jong Un said
he was considering the "highest level of hard-line countermeasure"
in response to President Donald Trump's warning that the U.S. would
annihilate North Korea if forced to defend itself or its
allies.
This was likely causing investors to be "antsy heading into the
weekend, " said Emmanuel Ng, an analyst at OCBC Bank.
Havens got a boost following the North Korean threats. The
Japanese yen and the Swiss franc both advanced against the dollar,
by 0.4% and 0.2%, respectively, and gold rose 0.2%.
The geopolitical tensions overshadowed investors' focus this
week on the Federal Reserve's next moves. The central bank
suggested Wednesday that it was open to the possibility of an
interest-rate increase in December.
Weak inflation numbers in recent months had made some investors
skeptical the Fed would raise rates again in 2017. But after the
Fed meeting Wednesday, investors now see a 75% chance of a rate
rise by the end of the year, according to Fed-fund futures tracked
by CME Group.
"The market is still way behind the Fed and is underpricing its
next moves," said Mike Bell, global market strategist at J.P.
Morgan Asset Management.
On Friday, 10-year Treasury yields were down at 2.247%, from
2.278% on Thursday, with yields moving inversely to prices. The WSJ
Dollar Index, which tracks the dollar against a basket of 16
currencies, fell 0.3%.
Investors were also looking to a key speech on Brexit by U.K.
Prime Minister Theresa May on Friday, in which she is expected to
set out her vision for Britain's future relationship with the
European Union after it leaves the bloc in 2019.
The British pound was down 0.1% against the dollar at $1.356.
Sterling had strengthened earlier this month after the Bank of
England signaled it might raise interest rates as soon as
November.
On Sunday, Germany votes in federal elections. Polls suggest
that Chancellor Angela Merkel's Christian Democratic Union party is
likely to win enough votes to give her a fourth term.
In Japan, gains in the yen hurt the Nikkei Stock Average, which
closed down 0.3%. A stronger currency would hurt the country's key
export stocks. Hong Kong's Hang Seng fell 0.8%, while in South
Korea the Kospi fell 0.7%.
Chinese shares were broadly down after rating firm Standard
& Poor's on Thursday downgraded the country's sovereign credit
rating because of risks associated with its increasing debt. The
Shanghai Composite Index fell 0.2%, while the Shenzhen benchmark
was down 0.3%.
In commodities, U.S. crude fell 0.2% to $50.47 a barrel after
members of the Organization of the Petroleum Exporting Countries
met in Vienna on Friday.
Lucy Craymer contributed to this article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
(END) Dow Jones Newswires
September 22, 2017 09:53 ET (13:53 GMT)
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