Stocks recover from N. Korea shock
london — Global stock markets rebounded on Wednesday from heavy losses as US President Donald Trump’s measured response to North Korea’s missile launch reassured investors, dealers said.
Asian and European bourses clawed their way higher after overnight Wall Street gains, despite additional concern over tropical storm Harvey in the United States.
“Stocks are rebounding today because there is a perception that North Korean tensions have eased,” said William Hamlyn, investment analyst at Manulife Asset Management.
“Markets have no idea what is going on inside Kim Jong-Un’s head, so we are likely to see a period of flipping between ‘risk on’ and ‘risk off’ modes,” Hamlyn told AFP. “Generally, economic news has been pretty good and earnings have been decent, which is bringing in buyers.”
Markets were rocked Tuesday after nuclear-armed North Korea fired a missile into Japanese airspace, deepening geopolitical worries while sending safe-haven assets like gold higher.
While Japanese Prime Minister Shinzo Abe called the launch “an unprecedented, serious and grave threat”, Trump — who had warned North Korea of “fire and fury” over a previous missile test — said only that “all options” were on the table. In the face of UN condemnation and US warnings of severe repercussions, North Korean leader Kim Jong-Un has promised more missile flights over Japan, insisting the launch was a mere “curtain-raiser”. But while analysts said the North Korean threat was still apparent, unease was soothed by the fact that Trump and Abe stuck to a diplomatic line and the UN Security Council met.
Seoul stocks — which shed 0.2 per cent on Tuesday — added 0.3 per cent, Tokyo advanced 0.7 per cent and Hong Kong rallied 1.2 per cent. Frankfurt, London and Paris experienced modest gains. The greenback also bounced back, supported by bargain-buying and a strong consumer confidence reading, while dealers were upbeat about upcoming US jobs data on Friday. The dollar had plunged Tuesday to as low as 108.50 yen as dealers rushed for safe havens.
The greenback also picked up against the euro, a day after the single currency hit $1.2070 — the highest level since January 5, 2015. The euro has also been boosted by expectations the European Central Bank will soon start cutting down its stimulus, while talk of fresh Federal Reserve interest rate rises has eased.
Oil prices slid Wednesday on fears of a long-term shutdown of refining capacity in the oil-rich Gulf Coast region due to Harvey.
“Hurricane Harvey, which has now been downgraded to a tropical storm, is continuing to keep the oil market on tenterhooks,” noted Commerzbank analyst Carsten Fritsch. — AFP