North Korea's foreign minister Ri Yong Ho outside the UN Plaza hotel in New York © AP
Tuesday 12:20 BST
What you need to know
- Haven flight loses momentum in European trade
- Euro under pressure under $1.19 as dollar finds support
- Kurdistan tension drives oil to two-year high
- Equities track poor session in New York as risk appetite remains muted
- Focus turns back to Yellen
Leading quote
“Tensions around North Korea should continue to drive market volatility in otherwise unusually calm markets,” says Joyce Chang, global head of research at JPMorgan Chase.
“North Korea has generated many false alarms over the past decade and each incident has been met with modest market reactions. The actual situation is probably getting more serious than markets perceive.”
Hot topic
Equities are slipping and havens are finding support after dark rhetoric from North Korea added to tensions with the US over the communist state’s nuclear ambitions.
But the extent of the flight to safety in the immediate aftermath of bellicose words from Pyongyang is fading as European trade gathers momentum.
Gold, US government bonds, the Japanese yen and the Swiss franc are all calmer, having outperformed after North Korea’s foreign minister accused Donald Trump, the US president, of declaring war.
The yield on the US 10-year Treasury, which moves inversely to price and often slides when risk is heightened, is flat at 2.2 per cent, having been almost 4 basis points higher.
Gold is down 0.1 per cent at $1,309.41, having been as high as $1,313.54 in a rally of more than 1 per cent over the previous session, sparked by the geopolitical clash.
Among haven currencies, the Swiss franc is 0.2 per cent weaker at SFr0.9687 per dollar and Japan’s yen is 0.1 per cent stronger at ¥111.60 per dollar.
Commodities
Brent crude is at its highest price since July 2015 amid a threat to exports from Iraqi Kurdistan as the region holds an independence referendum. It comes as hopes for a recovery in demand also support the international oil marker. After rising by almost 4 per cent over the previous session, it is flat at $59.01.
West Texas Intermediate, the US benchmark, was up 0.3 per cent at $52.35 a barrel after rising 3.1 per cent on Monday to its highest level since April.
Equities
European stocks are tracking a lacklustre showing in Asia and the US, with a cautious but steady feel to trade. The Euro Stoxx 600 is up 0.1 per cent, with London’s FTSE 100 slipping 0.1 per cent and Frankfurt’s Xetra Dax 0.2 per cent higher.
Seoul’s Kospi is 0.3 per cent lower and the Hang Seng in Hong Kong is down 0.1 per cent. Japan’s Topix is flat, as is the Shanghai Composite.
In the US overnight, the S&P 500 ended 0.2 per cent lower at 2,496 — recovering from a low of 2,488.03 — while the tech-heavy Nasdaq Composite index fell 0.9 per cent. Futures markets are pointing to marginal opening losses at the start of New York trade.
Forex
The dollar is making some progress ahead of a speech in Ohio from Janet Yellen, chair of the Federal Reserve, entitled “Prospects for Growth: Reassessing the Fundamentals”. It will be closely followed for signs of the US central bank’s thinking on the pace of its rate tightening cycle.
In the meantime, the dollar index, which measures the greenback against a basket of peers, is up 0.3 per cent at 92.9278, its highest level of the month.
The euro, which fell through the $1.19 threshold against the dollar on Monday after the German election result in its worst trading day of 2017, is looking exposed to the dollar rebound, dropping 0.4 per cent to $1.1794.
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