Global markets dip on new H-bomb threat from North Korea
It was widely expected that North Korean leader Kim Jong Un would not react favourably to the latest verbal attack by Donald Trump during his United Nations speech this week. The President vowed to ‘totally destroy North Korea’ if the US or its allies were provoked, in a speech that has drawn praise from his base and criticism from the liberal mainstream for being overtly aggressive in tone.
Jong Un responded by threatening to detonate yet another hydrogen bomb, but this time in the pacific and not on the DPRK’s home turf. This would be a grave step forward, especially if the missile flies directly over Japan as non-nuclear projectiles have in recent weeks.
In markets the price of gold is heading higher (which usually happens in response to possible conflict). Asian markets lost significant ground too, with the Indian NIFTY50 looking like the most rattled index globally, falling over 150 points during trading hours – the biggest single-day fall for weeks.
In Europe, a better prognosis. German growth is up again, with the manufacturing and service sectors boosted higher than expected according to new data. This news has not yet translated to big gains for the DAX30, but that may be because of nervousness about German elections coming this Sunday, though they are likely to produce a vote in favour of Angela Merkel staying in power for another 4 years, much to the chagrin of the popular AfD (anti-immigration anti-Euro) party.
The DAX30 has outperformed its peers in Europe over the last 5 years, but some investors believe that German stocks, especially industrials like carmakers, are too highly priced.