One of Donald Trump’s assistants, Sebastian Gorka, spoke about the situation on Radio 4 today:
“Donald Trump has been unequivocal: he will use any appropriate measures to protect the United States and her citizens.
We do not telegraph our future scenarios and how we are going to react,” he said. “If you show players around a table your poker hand, you will lose that game. It is not a good idea in cards, it is a very bad idea in geopolitics.”
European stock markets have also added to yesterday’s losses in early trading.
The French, German and UK markets are all in the red in early trading.
In London, the FTSE 100 tumbled by 40 points to a one-week low.
Mining shares are leading the fallers, reflecting concerns that the North Korea crisis could hurt the economy and dent demand for commodities.
Connor Campbell of SpreadEx says:
The FTSE suffered another sharp fall at the open, as the latest developments in the US/North Korea situation weighed on its commodity stocks…..
It appears that Pyongyang’s detailed strike plan against Guam has created a sour backdrop to trading.
(The FTSE 100’s decline is also partly because some major companies have gone ‘ex-dividend’, meaning new shareholders won’t get the next divi payment).
Gold rises and Korean won falls
The growing tensions between North Korea and the United States are continuing to weigh on the financial markets today.
The gold price has hit a two-month high this morning, at $1,280.5 per ounce, as investors remain jittery following Donald Trump’s ‘fire and fury’ threat earlier this week.
Overnight, North Korea raised the stakes further by outlining a plan to fire a missile into the water near Guam, the US territory in the Pacific.
General Kim Rak Gyom, the head of the country’s strategic forces, declared that Trump was “bereft of reason”, in a statement that could rile the US president.
My colleague Julian Borger reports:
The response from Pyongyang was its most public and detailed threat to date, and evidently meant to goad the US president.
Trump had “let out a load of nonsense about ‘fire and fury’ failing to grasp the ongoing grave situation. This is extremely getting on the nerves of the infuriated Hwasong artillerymen of the KPA.”
This is causing understandable concern over the border in South Korea.
South Korea’s Kospi stock market index has fallen by 0.4% today, adding to the 1% wiped off shares on Wednesday.
The South Korean Won is also suffering, falling by 0.8% to a four-week low against the US dollar.
Although the City isn’t panicking, it is certainly watching the situation closely.
Konstantinos Anthis of ADS Securities says investors are either sitting on the side-lines or looking to sell risky assets and buy safer ones.
The escalation of the rhetoric between the US and North Korea is keeping market participants on their toes and with no fresh economic reports the price action is dictated by the headlines.
The agenda: UK trade figures
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we discover whether the weak pound is helping Britain’s factories, and making a dent in her trade deficit.
The City is bracing for new UK trade figures at 9.30am; economists predict that the total gap between everything the UK imports and exports narrowed slightly in June, after jumping to £3.1bn in May.
Trade volume growth appears to be moving in the right direction, with exports up 3.8% 3m/3m in May 2017, and imports growing more slowly at 2.8%. And the surveys back up anecdotal evidence that UK exports are responding to sterling weakness.
However, so far, this has done little to reduce the trade deficit in absolute terms. We expect another relatively hefty deficit in June.
New industrial production figures are also being released, and may show that manufacturing output was flat in June, month-on-month. A strong reading might raise hopes that Britain’s growth rate in the second quarter of 2017 could be revised up, from the first estimate of 0.2%.
On the corporate front, mining giant Glencore, the Co-operative Bank, estate agent Savills and sofa chain DFS are all reporting results.
- 9.30am BST: UK trade figures for June
- 9.30am BST: UK industrial production and manufacturing output for June
- 1pm BST: NIESR’s estimate of UK growth in May to July
- 1.30pm BST: US weekly jobless figures