Markets higher as geopolitical tensions ease
On Wednesday European stocks followed most Asian equities higher as tensions surrounding North Korea eased. The yen dropped as demand for safehaven assets began to fade, although gold and the Swiss franc held Tuesday’s gains.
Almost every sector of the Stoxx Europe 600 Index advanced after President Donald Trump’s measured response to North Korea’s missile launch and comments from Kim Jong Un suggested the situation won’t escalate. Equity indexes in Japan, Hong Kong and South Korea rose, while U.S. stock futures were also green. Most bonds fell as the risk-off mood ebbed. The euro weakened and the dollar edged higher as Goldman Sachs Asset Management called the greenback “very, very attractive.”
Kim said Wednesday the missile was fired in protest at annual military exercises between the U.S. and South Korea. Coupled with Trump’s tempered remarks — the president said the U.S. will consider “all options” in its response to the provocation — investors judged the standoff is unlikely to intensify, helping to underpin risk assets.
The Stoxx Europe 600 Index advanced 0.6 percent as of 7 a.m. in New York, the largest gain in a week. The U.K.’s FTSE 100 Index advanced 0.4 percent, the biggest gain in a week. Germany’s DAX Index advanced 0.5 percent, the largest gain in a week. Futures on the S&P 500 Index climbed 0.1 percent to the highest in a week.
The Topix index rose 0.6 percent at the close in Tokyo and the Kospi index added 0.3 percent. The Hang Seng Index in Hong Kong climbed 1.2 percent, while the Shanghai Composite Index fluctuated before edging lower. The MSCI Asia Pacific Index rose 0.2 percent. The Japanese yen declined 0.1 percent to 109.86 per dollar.
Gold climbed 0.2 percent to $1,311.57 an ounce, the strongest in about 11 months. West Texas Intermediate crude dipped 0.5 percent to $46.19 a barrel, the lowest in more than five weeks.