For the fourth day, world stocks and the euro continue to fall. Investors who had loaded up on both this year have taken step back as the list of global uncertainties continues to grow yet again. The new low in relations between the U.S. and North Korean, the rise of oil, falling tech stocks, and the prospect of more guidance from the Federal Reserve on its next moves.
The futures markets indicated a slow start for Wall Street being that most are cautious after Facebook endured its largest drop in 10 months and progressive decline in Apple’s stock.
The single currency still feeling the effects of the German election fell under $1.18, giving it its worst day of the year. The yen which typically shines in uncertain markets declined and gold fell back from a one week high. The euro slipped to $1.1782 during afternoon trading in London heaviest one-day loss since December.
This was the effects of North Korea’s foreign minister stated U.S. President Donald Trump tweeted that its leader Kim Jong Un may not be around for too much longer, bringing on a declaration of war.
John Hardy of Saxo Bank stated, “There is a lot being attributed to North Korea but I think there are a lot of other factors here,” he added, citing the drop in U.S. tech stocks and the weekend German elections.
The bond market’s reaction to the escalation in tension between North Korea and the U.S. was short-lived. Yields on U.S. Treasuries and German Bunds fell following Ri Yong Ho’s comments to Trump’s tweet. Both traded right back up on Tuesday. Most of the other euro zone bond yields were also a tad bit higher.
THE HERALD FINANCE REPORT
Start your workday the right way with the news that matters most.
A speech from Fed chair Janet Yellen came into focus. The dollar climbing and investors analyzing her speech for any clues on whether the U.S. central bank will increase interest rates again this December.
According to Chicago Mercantile Exchange, money markets lead to a 70 percent chance of a hike in December and a 20 percent of another increase in March of 2018. Analyst believe the rise in oil is supports inflation, and an anticipated sale German debt should keep rising pressure on yields.
Brent crude futures dropped to $58.42 a barrel, the highest since July 2015 and over 34 percent above the 2017 low. The increase was supported by Turkey’s threat to cut crude exports from Iraq’s Kurdistan region.
On Monday, Turkish President Tayyip Erdogan threatened to cut off the pipeline that contributes over 500,000 barrels of crude daily from Iraq to the Turkish port. The loss of this supply combined with the 1.8 million bpd of supply cuts by the Organization of the Petroleum Exporting Countries and non-OPEC producers, is raising concerns for a tighter supply.