World Economy

US-North Korea Tensions Hit Asia, Europe Markets

US-North Korea Tensions Hit Asia, Europe MarketsUS-North Korea Tensions Hit Asia, Europe Markets

Asian and European markets mostly sank while safe-haven assets rallied Tuesday as US-North Korea tensions flared up again after Pyongyang accused Donald Trump of declaring war on the country and warned it could shoot down US bombers.

Foreign Minister Ri Yong-ho’s comments came at the United Nations in response to Trump’s warning on Twitter at the weekend that North Korea “won’t be around much longer” if it continues its threats, AFP reported.

While most analysts do not expect a nuclear conflict, China and Russia have been among the countries to express alarm. “This does represent a significant escalation in rhetoric and raises the risk of a tactical misstep,” Tapas Strickland, a Sydney-based economist at National Australia Bank, told Bloomberg News.

And the concerns are being felt on financial markets, with safe-haven investments rising. Gold was up more than 1% at $1,310, while the Japanese yen recovered recent losses against the dollar.

Tokyo’s Nikkei index ended 0.3% lower, while Seoul shed 0.3%. Sydney, Singapore and Taipei were also in the red. However, Shanghai and Hong Kong both eked out minor gains on bargain-buying.

In early European trade, London fell 0.2% and Paris lost 0.1% while Frankfurt retreated 0.3%.

On currency markets, the dollar struggled to recover from its New York losses and was sitting around 111.50 yen, well off the levels around 112.50 yen seen in Tokyo earlier Monday. Adding to the greenback’s weakness were conflicting comments from top Federal Reserve officials over the timing of the bank’s next interest rate rise.

The euro was also on the back foot after European Central Bank boss Mario Draghi aired concerns about its recent strength and hinted that policymakers could keep monetary stimulus for some time as the eurozone economy recovers. The unit was at $1.182, having topped $1.20 on Friday.

However, energy firms were mostly higher. Oil prices surged Monday after Turkish President Recep Tayyip Erdogan threatened to block key crude exports from Iraq’s Kurdish region, which held an independence referendum on  Monday.

Brent jumped nearly 4% to its highest level since July 2015, while US benchmark West Texas Intermediate piled on 3%. However, the two contracts were both down Tuesday.

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