World stock markets spiralled lower on Tuesday after North Korea fired a ballistic missile over Japan, deepening geopolitical worries but sending the euro and gold hurtling higher. Pyongyang fired the missile over Japan and into the Pacific Ocean, in a major escalation that triggered global alarm and a furious response from Tokyo.Investor (LSE: 0NC5.L – news) sentiment was also battered by monster storm Harvey in Texas, where it swamped streets and highways with unprecedented rainfall.”The combination of North Korea’s missile launch and the devastating impact of Harvey is weighing on risk appetite today,” OANDA analyst Craig Erlam told AFP.”Any increase in geopolitical risk, particularly involving North Korea, triggers a move to safety in markets as investors become increasingly concerned about the potential for things to escalate rapidly.”The damage caused in Houston is also weighing on sentiment, due to both the sheer devastation it has caused and the uncertainty over the cost and economic impact.”
“Euro/dollar has hit its highest level since the first trading day of 2015 today and broken through the psychological $1.20 level along the way,” added Erlam.”It seems geopolitical risk and the devastation in Houston have turned people away from the dollar.”
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