Tech Selloff, North Korea Threats Keep a Lid on Stocks
September 26 2017 - 9:07AM
Dow Jones News
By Marina Force
Global stock markets were mixed Tuesday, following a selloff in
technology shares on Wall Street and fresh threats from North
Korea.
The Stoxx Europe 600 was flat, after opening in the red, with
European mining and energy shares among the biggest winners. Asia
stocks closed broadly lower amid a pullback in shares of tech
firms.
Futures pointed to a flat opening for both the S&P 500 and
the Dow Jones Industrial Average, after Wall Street closed lower on
Monday with tech stocks under pressure.
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 in
recent months.
"Markets do get jolted by these things," said Sat Duhra, a
portfolio manager at Janus Henderson Investors, referring to the
escalating military tensions.
Haven assets' reactions to the latest comments from North Korea
were muted. Gold prices were down 0.5% and the Japanese yen, which
tends to rise when markets stutter, was off 0.2%, while the Swiss
franc lost 0.5%.
Elsewhere in the currency market, the WSJ Dollar Index, which
measures the greenback against a basket of 16 others, rose 0.4% to
86.14 Tuesday, after closing Monday at its highest this month. The
euro fell 0.5% against the dollar, extending Monday's losses, after
Angela Merkel's conservative alliance won the German election, but
lost ground to the nationalist Alternative for Germany group.
"Politics is really difficult to predict, particularly
coalitions, horse-traded behind closed doors...I think the
coalition [government] will take some time to form and so we will
have some political uncertainty there," said Anthony Rayner, fund
manager of the CF Miton Multi Asset Fund, signaling this might
weigh on the currency.
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. Markets will also be watching
U.S. GDP and personal spending data due Thursday for cues on the
central bank's policy path.
Investors are hoping for monetary guidance from the Fed, which
last week hinted it would raise rates once more this year. However,
many traders were skeptical the Fed would provide any clarity.
"I don't think there is going to be an a-ha moment for the
markets after any of the speeches. They [Fed members] tend to move
back and forth between hawkish and dovish, in terms of their
language at least," said Mark Heppenstall, chief investment officer
at Penn Mutual Asset Management.
Federal-funds futures, used by investors to place bets on the
Fed's rate-policy outlook, showed Monday a 73% chance of a rate
increase by December, according to CME Group data.
In the bond market, the 10-year Treasury yield moved slightly
higher to trade at 2.221%, compared with Monday's close of 2.220%.
Yields and prices move in opposite directions.
Meanwhile, Brent crude fell 1.3% to trade at $57.68 a barrel,
after hitting its highest level in more than two years Monday, amid
a growing market consensus that the OPEC-led deal with major
producers limiting output will be extended.
In Asia, South Korea's Kospi closed down 0.3%, with Samsung
Electronics off 3.7%. Japan's Nikkei Stock Average moved 0.3%
lower, with tech stocks also facing selling pressure. Sony and
Nintendo were down 2% and 1.9%, respectively. Hong Kong's Hang Seng
Index finished unchanged, and the Shanghai Composite Index added
0.1%.
Kenan Machado contributed to this article.
(END) Dow Jones Newswires
September 26, 2017 08:52 ET (12:52 GMT)
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