Tuesday August 29th

29-08-2017

Dow futures fall 109 points as North Korea jitters return to haunt Wall Street

U.S. stock index futures pointed to a sharply lower open on Tuesday, as geopolitical concerns surrounding North Korea and the West were amplified, following news that a missile had passed over Japan. Dow Jones industrial average fell 109 points, while S&P 500 and Nasdaq 100 futures declined 13.25 points and 46.25 points, respectively. In recent weeks, concerns around North Korea have subsided as tensions appeared to have eased between the country and the West. On Tuesday however, Japan's Prime Minister Shinzo Abe told reporters that a ballistic missile which was fired by North Korea had passed over Japan. Abe has since stated that the missile posed a grave threat to the country of Japan, and that he would ask the United Nations to ramp up the pressure on Pyongyang. Markets worldwide showed signs of nervousness, with investors turning to safe-haven assets. Markets in Asia and Europe fell into the red on the back of the geopolitical news. Aside from North Korea, domestic politics will be of key importance as President Donald Trump heads to Texas on Tuesday amidst the flooding that is causing chaos in Houston. Investors will also be looking for how the U.S. incumbent will respond to recent reports about his presidency and how he will handle North Korea. Investors in the U.S. are likely to keeping note of how much of an impact Hurricane Harvey will have on the energy sector, as well as other businesses such as insurance, after several businesses and refineries had to temporarily shut due to the natural disaster. In early morning trade however, oil prices fluctuated between gains and losses, supported by reports of supply disruptions in Colombia and Libya. At 8:31 a.m. ET, U.S. crude was slightly up at around $46.65 per barrel, while Brent was lasting standing around $51.97. In data news, the S&P CoreLogic Case-Shiller Home Price Index is due out at 9 a.m. ET, followed by consumer confidence and the Dallas Fed's Texas Service Sector Outlook Survey, set to come out at 10 a.m. ET and 10:30 a.m. ET respectively. Asian shares fell on Tuesday as investors turned to safe-haven assets and U.S. futures traded lower after a North Korean missile launch, although major indexes were off session lows by the end of the day. Japan's Nikkei 225 retraced some of its initial losses to close down 0.45 percent, or 87.35 points, at 19,362.55 after a North Korean missile flew over the country early on Tuesday. Japanese Prime Minister Shinzo Abe said in a statement that the launch was reckless and unprecedented. Across the Korean strait, the Kospi lost 0.23 percent, or 5.56 points, to end at 2,364.74 as investors processed the latest developments on the peninsula. The tech-heavy Kosdaq erased earlier losses to close higher by 0.16 percent. The risk off sentiment also appeared to weigh on greater China markets. The Hang Seng Index slipped 0.32 percent by 3:05 p.m. HK/SIN. Mainland markets were more subdued, with the Shanghai Composite erasing earlier losses to close 0.09 percent above the flat line at 3,365.6279 and the Shenzhen Composite slid 0.243 percent, or 4.705 points, to end at 1,932.0556. Gold prices rose for a third day on Tuesday to its highest since November as mounting geopolitical tensions over a new North Korean missile launch stoked demand for safe-haven assets and weighed heavily on the dollar and equities. Spot gold rose 0.96 percent to $1,322.02 per ounce, after earlier touching its highest since Nov. 9 at $1,322.33. Gold gained 1.4 percent in the previous session in its biggest one-day percentage rise since mid-May. U.S. gold futures for December delivery were up 0.92 percent to $1,327.40 per ounce.