European stocks recoup losses
london — Europe’s main stock markets chugged higher on Tuesday as fears dissipated over North Korea’s weekend nuclear test, but London was pegged back by disappointing data.
The US ambassador to the United Nations Nikki Haley told an emergency Security Council meeting that Pyongyang was “begging for war” and called for the “strongest possible measures” against Kim Jong-un’s regime.
The test, which North Korea says was of a hydrogen bomb, came less than a week after it fired a rocket over Japan, while Seoul said there were signs the reclusive state was preparing to launch another.
Stocks in Asia and Europe had fallen on Monday in response to the unfolding drama, but investors took a more sanguine approach on Tuesday, dealers said.
“Flare-ups on the Korean peninsula are fast becoming a weekly occurrence,” noted analyst Michael Hewson at trading firm CMC Markets UK.
“While financial markets remain nervous about the potential for the next dangerous conflagration, each escalation on the part of North Korea seems to elicit a milder market reaction than the previous one.”
Asian equities nevertheless struggled on Tuesday and the safehaven yen and gold held gains as traders mulled the latest North Korea test that has prompted warnings of US military action.
While financial markets remain nervous about the potential for the next dangerous conflagration, each escalation on the part of north Korea seems to elicit a milder market reaction than the previous one Michael Hewson, analyst, CMC Markets UK
In Europe, however, Frankfurt and Paris rose but London gains were capped by weak data.
Britain’s services sector grew at the slowest pace in almost a year in August amid uncertainty over Brexit, a survey showed on Tuesday. The purchasing manager’s index for services fell to 53.2 in August from 53.8 in July, data compiler IHS Markit revealed. That undershot market expectations of a fall to 53.5, though it remained above the 50 figure which indicates expansion.
The service sector, which accounts for around 80 per cent of British economic activity, grew at the slowest pace since September 2016.
Later on Tuesday, traders will be eyeing Wall Street’s reaction to the latest North Korea events, having been closed on Monday for the Labour Day public holiday.