Korea tensions hit global stocks, dollar

Korea tensions hit global stocks, dollar

Korea tensions hit global stocks, dollar

If this is true, the rising tensions between North Korea and the U.S. might lead to military conflict.

Asian markets struggled on Tuesday while the safe-haven yen and gold held gains as traders fretted over North Korea's weekend nuclear test which prompted warnings of United States military action.

UN Secretary General Antonio Guterres warned against using "confrontational rhetoric" over North Korea and said big powers must come up with a single strategy to address the crisis as major countries sparred over a response to Pyongyang's provocations.

North Korea's relentless and escalating pursuit of nuclear weapons gives this week's financial markets a theme of "risk-off" protection, where investors perceive risk as high and tend to gravitate toward investments considered safer.

US markets were closed on Monday for labor day, and in European stocks extended a selloff that started in Asia.

Analysts said traders will be eyeing Wall Street's reaction to the latest events, having been closed Monday for Labor Day. Rockwell Collins shares rose 0.3%.

"With a news report that North Korea is preparing for missile firing, the dollar's topside is likely to remain heavy for the time being", said an official of a bank-affiliated securities firm. With U.S. indices hitting repeated new highs, one would expect gold to be hovering near multi-year lows.

While Treasuries may be a common sense safe haven during times of geopolitical uncertainty, Kensho found a consistent decline after previous nuclear tests.

Markets also digested Fed Governor Lael Brainard'scomments on Tuesday that the Federal Reserve had to be "cautious about tightening policy", given that inflation was below the central bank's target.

"We see that strangely playing out in the dollar", said Jonathan Butler, commodities analyst at Mitsubishi in London.

USA gold futures for December delivery rose 0.4% to US$1,344.60.

Fears of a debt default had boosted the USA dollar and treasury yields through safe haven buying, but once that concern was lifted, those flows reversed, Butler said.

"North Korea accounts for most of it".

The ICE U.S. Dollar Index DXY, -0.06% slipped 0.03%. Wellington retreated but Singapore added 0.4 percent.

Gold prices dipped lower on Wednesday after President Donald Trump agreed to raise the debt ceiling and extend the government funding through Dec.15.

ASIA'S DAY: Tokyo's Nikkei 225 fell 0.6 percent to close at 19,385.81 and Seoul's Kospi lost 0.1 percent to 2,326.62.

Palladium added 0.8 percent to United States dollars 988.50, after earlier reaching its highest since February 2001 at USD 1,001.

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