Let’s just get through to­day, shell­shocked mar­kets de­cide

The Scotsman - - Business - Com­ment Martin Flana­gan

Mar­kets don’t know whether to stick or twist with the volatile brinkman­ship go­ing on around North Korea. There was the pre­dictable re­newed selloff of eq­ui­ties on Tuesday when the in­creas­ingly mis-ti­tled Her­mit King­dom fired a mis­sile over Ja­pan.

Yes­ter­day, some steadi­ness re­turned to cap­i­tal mar­kets, for no other rea­son ap­par­ently in the crazy-mir­ror stand­off with Kim Jong-un than that as far as many traders are con­cerned no neg­a­tive news now is good news. Good luck with that com­fort blan­ket.

The rel­a­tive sta­bil­ity is far from a re­bound. North Korea’s bel­liger­ence has be­come a geo-po­lit­i­cal shadow with a cap­i­tal S.

Market pro­fes­sion­als are cau­tious about buy­ing on weak­ness be­cause they have been burnt be­fore, hav­ing moved in when con­certed po­lit­i­cal sanc­tions have seemed tem­po­rar­ily to rein in Kim Jong-un only to see the dic­ta­tor then thumb his nose at the in­ter­na­tional com­mu­nity again with fla­grant ag­gres­sion and ratchet up ten­sions anew. Euro­pean eq­uity mar­kets have gen­er­ally been weaker over the sum­mer, and the mis­sile over Ja­pan – one of North Korea’s most provoca­tive ac­tions in 20 years – is not go­ing to re­store bullish sen­ti­ment.

For eq­ui­ties, a pe­riod of tread­ing wa­ter may be the best that can be ex­pected in the cur­rent cli­mate of flash­point, step­back, then re­newed dan­ger zone.

Bet­ter stag­na­tion than panic-sell­ing, though.

Change of food fo­cus

Co-op Group’s move to ac­quire con­ve­nience store chain Nisa con­tin­ues the flurry of changes that have en­veloped the food re­tail sec­tor. It fol­lows the war of at­tri­tion waged on the Big Four su­per­mar­kets by the dis­coun­ters Aldi and Lidl for sev­eral years, fi­nally lead­ing the in­dus­try – and new en­trants – to think more imag­i­na­tively about how to re­act.

This has ba­si­cally in­volved fo­cus­ing on food whole­sal­ing, con­ve­nience stores and non-food. Sains­bury’s took over Ar­gos; Tesco has an agreed bid for Booker on the ta­ble, sub­ject to reg­u­la­tory ap­proval.

Ama­zon also fo­cused a few minds on its grand en­trance via the takeover of Whole Foods, while Mor­risons thought lat­er­ally by re­viv­ing the Safe­way brand on some prod­ucts. A kalei­do­scope.

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