Global markets recover as North Korea tensions ease

Fears calmed after CIA director’s comment of there being ‘nothing imminent’

LONDON: Global stock markets clawed back losses on Monday as spiralling tensions over North Korea showed tentative signs of easing, in turn reducing appetite for safe haven assets.

Fears of a catastrophic confrontation between Washington and Pyongyang were calmed when CIA Director Mike Pompeo said on Sunday there was “nothing imminent” in the escalating stand-off.

Equities were boosted also by a positive lead from Wall Street on Friday, after investors waded back into the market following a three-day sell-off.



Around 10:30 GMT, London’s benchmark FTSE 100 index climbed 0.5% compared with the close on Friday, while the eurozone’s Frankfurt and Paris indices were up about 1% in early mid-day deals.

“European equity markets appear to have left the fears of late last week behind, with investors coming out of their defensive positions to move back into riskier assets,” said Joshua Mahony, market analyst at traders IG.

In Asia, Hong Kong was back in the positive territory on Monday after slumping 2% on Friday, while Shanghai ended the day higher despite data showing Chinese industrial production slowed sharply in July as government efforts to rein in debt weighed on demand.

However, Tokyo closed 1% down as traders returned from a three-day holiday weekend to play catch-up after Asian and European shares had dropped on Friday, with the Nikkei finishing at its lowest level in more than three months.

Investors largely shrugged off official data, showing Japan’s economy grew by a faster-than-expected 1% in the three months to June, as the accelerating world number three economy marked its longest economic expansion in more than a decade.

“What we are seeing (Monday) is relief at the (geopolitical) situation not deteriorating over the weekend, something traders were clearly wary of towards the end of last week,” said Oanda analyst Craig Erlam.



As markets started recovering, the dollar rose against the Japanese currency to above 109.7 yen in afternoon trade - although still off 109.99 yen in Tokyo on Thursday - while gold halted its advance after jumping 2.4% last week.

Published in The Express Tribune, August 15^th, 2017.

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