North Korea Missile Shakes Markets

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.”

Source: N.Korea missile stuns global markets

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam