Global equities slip on N. Korea ‘jitters’; dollar dips vs euro, yen

Oil prices soften; gold hits 9-month peak

NEW YORK, Aug 29, (Agencies): Global equity prices slipped and investors flocked to safe-haven assets on Tuesday after North Korea fired a missile over northern Japan, fueling fresh tension between Washington and Pyongyang.

The dollar fell to its lowest in more than 2-1/2 years against a basket of major currencies, benchmark 10-year Treasury yields fell and gold hit a more-than-ninemonth peak.

North Korea fired a ballistic missile over Japan’s northern Hokkaido island into the sea on Tuesday, prompting a warning from US President Donald Trump that “all options are on the table” as the United States considers its response.

MSCI’s world index, which tracks shares in 46 countries, fell to a one-week low as a dip in risk appetite dominated Asian and European stock markets.

US stocks pared losses after opening sharply lower.

The Dow Jones Industrial Average rose 11.02 points, or 0.05 percent, to 21,819.42, the S&P 500 lost 2.72 points, or 0.11 percent, to 2,441.52 and the Nasdaq Composite added 3.32 points, or 0.05 percent, to 6,286.34.

Rising geopolitical tensions and a surging euro sent European shares to their lowest in six months and the pan-European STOXX 600 was down 1 percent, set for its worst daily performance in two months.

Gold, which is considered a good store of value during volatility in other markets, jumped to its highest since November.

Spot gold was up 0.6 percent to $1,317.31. Other precious metals, including silver and platinum, also gained.

The greenback was down 0.38 percent against the yen at 108.83 yen, after falling as much as 0.9 percent earlier to a 4-1/2-month low of 108.28 yen.

The dollar index, which measures the greenback against a basket of six major currencies, was 0.29 lower at 91.943, after hitting 91.621, its lowest since mid-January 2015.

Crude oil prices slipped lower as the market grappled with the shutdown of 13 percent of refining capacity in the United States after a hurricane ripped through the heart of the country’s oil industry.

Brent crude was down 0.4 percent at $51.68 a barrel, while US crude was down 1.59 percent at $45.83.

US

US stocks rebounded from steep losses to trade slightly higher on Tuesday afternoon as investors shrugged off concerns over North Korea’s latest missile test.

The Dow Jones Industrial Average had dropped more than 100 points at the open as North Korea’s missile test over Japan escalated tensions with the United States and triggered a flight to safety. Trump warned “all options are on the table”.

At 12:33 p.m. ET (1633 GMT), the Dow Jones Industrial Average was up 17.27 points, or 0.08 percent, at 21,825.67 and the S&P 500 was down 1.24 points, or 0.05 percent at 2,443.

The Nasdaq Composite was up 10.79 points, or 0.17 percent, at 6,293.80.

Demand for safe-haven assets rose. Gold prices jumped to their highest since November, while the benchmark 10-year Treasury yields fell to their lowest since before the US presidential election.

Investors are also closely tracking the impact of Tropical Storm Harvey, which has crippled the US energy hub in Texas.

Six of the 11 major S&P sectors were lower, with the financial and materials sectors leading the decliners.

Nike fell 2.5 percent, weighing the most on the Dow, after Morgan Stanley cut its price target by $4 to $64.

Best Buy tumbled 11 percent, posting the biggest percentage loss among S&P companies, after the retailer warned that its strong quarterly same-store sales performance should not be seen as a “new normal”.

United Technologies rose 1.6 percent after a report that the company has made progress in its talks to acquire aircraft component manufacturer Rockwell Collins. Rockwell’s shares rose 1.8 percent.

Declining issues outnumbered advancers on the NYSE by 1,699 to 1,142. On the Nasdaq, 1,450 issues fell and 1,320 advanced.

Europe

Political tensions and a surging euro sent European shares to their lowest in six months on Tuesday after a missile launch by North Korea sapped global risk appetite.

The pan-European STOXX 600 ended the session down 1 percent, recovering some of the ground lost earlier in the day but still firmly on track to make August its third month of declines in a row.

Britain’s FTSE fell 0.9 percent and the exporter-heavy DAX hit a five-month low.

The euro surged above $1.20 for the first time since January 2015, after European Central Bank Chief Mario Draghi chose at last week’s Jackson Hole conference not to talk down a currency that has gained 14 percent year-to-date against the dollar.

Among the only bright spots were gold miners Randgold Resources and Fresnillo, up 4.6 and 2.6 percent respectively, as safehaven asset gold soared to a 9-1/2 month high.

Banking stocks sank 1.4 percent to a two-month low.

The VSTOXX, a gauge of European investor anxiety, jumped to its highest in a week.

German commercial broadcaster Prosiebensat fell 14.5 percent after flagging a weaker outlook for advertising in the third quarter, the third cut in advertising guidance this year according to Deutsche Bank analysts.

RTL Group dropped 5 percent, while Spanish and British broadcasters Mediaset Espana and ITV fell 7 and 4.9 percent. The media sector is the second worst-performing in Europe this year.

Lundin Petroleum sank 6.5 percent after its Korpfjell prospect, a joint venture with Statoil in the Barents Sea, found no oil and only non-commercial quantities of natural gas.

With Jackson Hole yielding no big change to monetary policy expectations, and the earnings season generating lukewarm share price reactions, catalysts for gains in European equities were scarce.

Some investors expected a correction, though valuations in the region remained attractive relative to Wall Street.

Asia

The yen rallied on Tuesday and Asian equity markets sank after North Korea fired a ballistic missile over Japan, ratcheting up geopolitical tensions in the region.

Stocks were in the red although initial sharp losses were pared, with Tokyo losing 0.5 percent to sit around four-month lows. Seoul ended 0.2 percent down, having lost more than one percent earlier. Hong Kong was 0.4 percent lower following five straight days of gains.

Sydney shed 0.7 percent while there were also losses in Taipei, Manila and Wellington, though Shanghai ended up 0.1 percent.

Key figures around 0810 GMT: Tokyo — Nikkei 225: DOWN 0.5 percent at 19,362.55 (close)

Hong Kong — Hang Seng: DOWN 0.4 percent at 27,765.01 (close)

Shanghai — Composite: UP 0.1 percent at 3,365.23 (close)

Dollar/yen: DOWN at 108.88 yen from 109.26 yen

Oil

Crude prices slipped lower on Tuesday as the market grappled with the shutdown of 13 percent of refining capacity in the United States after a hurricane ripped through the heart of the country’s oil industry.

The refinery closures helped to push US gasoline futures to a twoyear high of $1.7799 per gallon on Monday, though they had receded to $1.7466 by 1325 GMT on Tuesday.

International Brent crude futures were down 7 cents at $51.82 a barrel, having traded as high as $52.19 and as low as $51.36 earlier in the day.

US West Texas Intermediate (WTI) crude edged down 24 cents to $46.33 after falling more than 2 percent in the previous session and trading as high as $46.96 earlier in the day.

The damage assessment could lead to more volatility. Some refineries were preparing for restarts, but heavy rains are expected to last through Wednesday, adding to catastrophic flooding in Houston.

Refineries in Europe and Asia were already gearing up to replace the lost oil products, while the International Energy Agency said it could release emergency oil stocks in the event of extended outages.

Gold

Gold jumped to its highest since November on Tuesday as investors bought bullion as insurance against falling prices of other assets after North Korea tested a missile over Japan.

“Funds and traders are filling their boots with gold at the moment and so far that’s justified,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

“No matter where you look you can’t point your finger at anything that’s gold negative. Stocks are coming off hard, the dollar has weakened and now also against the yen, which has been the missing link, while bond yields are also taking a beating.”

Spot gold , which rose for a third straight session, was up 0.9 percent at $1,320.64 an ounce by 1355 GMT after touching $1,325.94, its highest since Nov 9.

US gold futures for December delivery rose 0.9 percent to $1,326.50.

Spot gold had climbed by 1.4 percent on Monday, breaking through key resistance and marking its biggest one-day percentage rise since mid-May after comments by the head of the European Central Bank boosted the euro and hit the dollar.