North Korea launched a ballistic missile and landed near Japan on Tuesday. This move created more tension as the former received backlash not only from Japan but from many countries and international governing bodies. It also resulted in various reactions from economies of various countries, Deutsche Welle reported.
The recent missile test sent investors dodging high-risk investments and rushing into safe-haven assets such as gold, Japanese yen, and US Treasuries. According to Rene Albrecht, an analyst at DZ Bank, this is an example of the “risk-off pattern.”
Precious metal haven
Gold received an increase of 1.9 percent and reached $1,322 an ounce, which is an almost 10-month high. And according to CNBC, gold futures in the U.S. for December delivery rose 0.3 percent and settled at $1,318.90 amid growing tensions concerning North Korea’s missile launch. Spot gold also gained 0.4 percent to $1,314.52 an ounce. Wang Tao, Reuters’ technical analyst, stated that spot gold is anticipated to increase to $1,337 after breaking the $1,300 resistance at $1,312.
Aside from the concerns surrounding North Korea, the ambiguity regarding the Trump administration that came from last week’s anxieties of a possible government shutdown also gave the precious metal an extra push.
Gold is not the only precious metal that soared high as platinum climbed 0.56 percent to $994.75 per ounce. Palladium also gained a 1.21 percent increase and reached $944.60 per ounce, going past $940.50, the metal’s 16-½-year high, on Friday.
Effect on currencies
On the same day as the missile launch, the Japanese yen rose. This has been a recurring trait for the currency in times of financial and political tension. However, the U.S. Treasuries yield dropped to 2.10 percent.
On the other hand, it looks like the euro is unfazed by the increasing geopolitical tension as it increased and went over the 1.20 mark while investors expressed hope towards the currency. This rise in euro lowered the European government bond yields. Germany’s yield declined three basis points and reached 0.34 percent. Its “Schatz” yield also declined and reached a four-month low of minus 0.76 percent.
Meanwhile, the U.S. dollar had a rough time following the missile test in North Korea. This news, along with pressures from Hurricane Harvey, Congress and the White House, sent the dollar plunging to an almost three year low.
When it comes to global stocks, the MSCI world index dropped 0.29 percent as an effect of the concerns about North Korea, per Yahoo! Finance. Europe’s STOXX 600 also decreased one percent.
On the other hand, Wall Street stocks enjoyed some good news as the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite increased 0.26 percent, 0.08 percent, and 0.30 percent, respectively. The Dow Jones ended with 21,865.37, while the S&P 500 reached 2,446.30. Nasdaq concluded the session with 6,301.89.
Why insurance is a sensible investment for any growing business
Business owners need to recognize the importance of insurance and how it is a valuable investment for a company's future.
3 things business travelers need in their travel plans
Unsurprisingly, travel buyers are setting goals like reducing costs, improving compliance, and boosting traveler satisfaction in 2019. To meet those...
Pay-As-You-Go vs. Subscription: Which model is best for your business?
Netflix does it, Spotify does it, and even razor companies have gotten on the bandwagon by offering subscription services. How...
US crude oil tankers headed to China as trade talks resume
With trade talks between the U.S. and China resuming, several ships have been identified as oil tankers likely delivering U.S....
Gambling outlook for 2019: Will the UK’s crackdown have an impact on investors?
Regulatory changes in the UK's gambling industry are set to take effect this year. How would these affect potential investors?
- Business5 days ago
How AR and VR are changing EdTech
- Featured5 days ago
Banking tech trends to watch for in 2019
- Business5 days ago
5 great real estate markets for investors in 2019
- Entrepreneurship3 days ago
Why and how to invest in healthcare app development
- Business3 days ago
What zero trust security will mean for the payments industry
- Commodities4 days ago
Newmont Mining agrees to all-share takeover of Goldcorp Inc.
- Featured4 days ago
The best security options for high-end luxury homes
- Business3 days ago
How construction companies are embracing environmental compliance