Europe
European stocks have suffered greatly today as traders were prompted to cut-and-run due to the escalating tensions between the US and North Korea. The stand-off between the two countries has encouraged dealers to dump stocks and seek safe haven investments like gold. While the two nations are at loggerheads, it is going to be difficult to imagine money flowing into stocks.
G4S (CO:G4S) shares are the worst performer on the FTSE 100 today even though the company posted a single digit rise in revenue and profits. The security firm is sticking with its reconstructing plan, and it is on target to cut costs by up to £100 million by 2020. G4S’s share price hit a record high in June, but it is down 6.6% today, as investors were concerned about the fractional growth in the emerging markets business. Emerging economies account for 40% of the sales stream, and the minimal growth spooked dealers.
Shares in Legal & General are off 1.7% despite the company reporting a robust start to the year. Operating profits for the first-half jumped by 27% and the interim dividend was increased by 7.5%. Similar companies like Aviva (LON:AV) and Prudential (LON:PRU) are under pressure today as traders dump financial services stocks on the back of increasing tensions between the US and North Korea.
Randgold Resources (LON:RRS) and Fresnillo (LON:FRES) are higher on the day due to the positive move in gold and silver. The metals do well in times of uncertainty as they are deemed to be safe-havens.
US
The Dow Jones, S&P 500 and Nasdaq 100 are all in the red today as trader exit US equities because of tensions between Donald Trump and Kim Jong-un. The stalemate between the US and North Korea has sent shivers down the spines of traders, and they are not taking any chances, so unwinding their long positions has been the strategy today.
Disney (NYSE:DIS) is going to throw itself into the ever expending world of streaming. The company plans to pull its movies from Netflix (NASDAQ:NFLX), and set up its own streaming service. Customers have been cutting back on expensive cable TV subscriptions, so Disney are hitting back by moving in a direction within the entertainment industry. The company has a long history of creating popular content, and now it needs to ensure its platform will be good enough to compete with Netflix and Amazon (NASDAQ:AMZN) Prime. Shares in Walt Disney, Netflix and Amazon are down 4.5%, 2.4% and 0.4% respectively.
FX
The EUR/USD is offside as dealers continue to cash in the euro long positions. The single currency has been giving up ground versus the US dollar lately in light of the extremely bullish run in enjoyed throughout 2017. Italy posted strong industrial production numbers today, and showed a healthy increase on the month and on the year, but it couldn’t prevent the decline. The single currency has dropped in value today against most major currencies, and it considerably lower versus the Swiss franc – a safe haven currency.
The GBP/USD has slipped throughout the morning session and is now slightly in the red. There were no major economic updates from the UK today. The US dollar has broadly been in demand today, but there are some notable exceptions like the Swiss franc and Japanese yen which made head way over the greenback. The pound has been in decline against the US dollar since Thursday, when the Bank of England delivered the dovish update.
Commodities
Gold is in demand as traders flock to the precious metal to seek refuge from falling stock markets. Today gold traded at its highest level since 14th of June – the June Federal Reserve meeting. The US dollar is a touch stronger, but it still couldn’t deter dealers from getting hold of the safe haven asset. Gold has been range bound for several months, and the real test will be if the metal can take out the June high of $1296.
Brent WTI crude oil initially jolted higher after the energy information agency (EIA) reported that oil inventories dropped by 6.45 million barrels, and traders were expecting a decline of only 2.5 million barrels. The report showed that gasoline inventories increased by 3.42 million barrels, while analysts were anticipating a drop of 1.5 million barrels. Oil edged lower after the increase in gasoline stockpiles prompted traders to sell the energy.
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