This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
US markets were seen little changed on Monday, with investors still gauging the impact from a hurricane that may once again gain strength. Meanwhile US futures including the Dow and the S&P 500 were both last seen with losses of over 0.3%, digesting the latest escalation of tension over North Korea. It will not be a pretty sight in Asia this morning.
We have seen US 10-year treasury yields sank this morning, threatening the 2.12% level. Obviously, the latest addition to a series of missiles, fired by North Korea, has changed the story for markets today. The suspected mid-range missile took a trajectory that crossed Japan, a provocation unprecedented since 2009. Reactions in gold prices have not been slight with prices breaking from the recent consolidation range and topping the $1300 psychological level to print a fresh 9-month high.
Assuming the trend we have seen of late, reactions from the US would likely be the key driver for how prices trend in the near term. So far it has been twitter-silence. Japan’s Prime Minister Shinzo Abe is noted to be discussing the matter with US President Donald Trump, one to follow for reactions. USD/JPY briefly sunk to a low of $108.34, last seen around $108.80 levels. Watch for a firm slide below $108 should we do get harsh responses from the US that could stroke fear of further retaliations from North Korea. On the other hand, a decline of this tension may reach the precious gold metal first.
Asian markets are set to see a synchronised decline with the ramping up of risk-off sentiment, underpinned by escalating geopolitical tensions. A deeper correction for the region may be seen with early movers having already led the way on the downturn. Neighbouring KOSPI and Nikkei 225 were last seen down 0.6% and 1.0% respectively as of 8.30 am Singapore time and may still have further room to slide with any escalations. The local Singapore market and Hong Kong bourse are expected to fare slightly better, though unlikely to escape this gloom.
Expect matters surrounding North Korea to be the key driver for markets today, but watch also for data including Hong Kong’s retail sales and US conference board consumer confidence figures today.
Yesterday: S&P 500 +0.05%; DJIA -0.02%; DAX -0.37%; FTSE -0.08%