Global equities sluggish amid N. Korea nerves, euro weakens

Oil falls from 26-month high on profit-taking; gold slips

NEW YORK, Sept 26, (Agencies): World stocks fell on Tuesday and the euro dropped to its lowest level in about a month as investors pulled back from trades that have worked for most of 2017 in the face of continued political uncertainty around the globe.

North Korea has boosted defences on its east coast, a South Korean lawmaker said, after the North said US President Donald Trump had declared war.

The latest US-North Korea development came as market participants were still reckoning with the German election, in which Chancellor Angela Merkel won a fourth term but her party was weakened by a surge in far-right support.

“The market has really been reacting to a combination of the North Korea news and its global impact and the election in Germany,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey. “This has been a low-volatility market and this is really the only significant news we have had lately.”

The Dow Jones Industrial Average rose 13.17 points, or 0.06 percent, to 22,309.26, the S&P 500 gained 1.56 points, or 0.06 percent, to 2,498.22 and the Nasdaq Composite added 4.52 points, or 0.07 percent, to 6,375.12.

The tech sector edged up 0.3 percent after its worst day in five weeks.

The pan-European FTSEurofirst 300 index lost 0.05 percent and MSCI’s gauge of stocks across the globe shed 0.33 percent. Emerging market stocks lost 0.72 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.69 percent lower, while Japan’s Nikkei lost 0.33 percent. The euro fell as worry grew about political fallout in Germany and other eurozone countries.

The euro was down 0.65 percent to $1.1769.

The dollar index, which measures the greenback against a basket of currencies, rose 0.57 percent.

US Treasury yields rose ahead of a speech by Federal Reserve Chair Janet Yellen and a $26 billion sale of two-year notes. Yellen was due to speak at 12:45 p.m. (1645 GMT).

Benchmark 10-year notes last fell 6/32 in price to yield 2.2392 percent, from 2.22 percent late on Monday.

Brent oil prices fell after investors took profit following a rally to 26-month highs spurred largely by threats from Turkey to cut crude exports from Iraq’s Kurdistan region. US crude fell 0.82 percent to $51.79 per barrel and Brent was last at $57.70, down 1.25 percent on the day. Spot gold dropped 0.7 percent to $1,300.49 an ounce.

US

US stocks gave up early gains on Tuesday as rising tensions between the United states and North Korea weighed, while investors awaited Fed Chair Janet Yellen’s speech for more clarity on interest rate hikes.

North Korean has boosted defenses on its east coast, a South Korean lawmaker said, following Pyongyang’s threat that it would shoot down US bombers flying near the peninsula.

US Joint Chiefs of Staff Chairman General Joseph Dunford said the United States should assume that North Korea has the ability to hit US mainland and that it has the will to use that capacity.

Yellen’s speech is also in focus after Fed officials gave differing views on inflation, keeping investors guessing about the path that the central bank plans to take on interest rates.

At 11:31 am ET (1531 GMT), the Dow Jones Industrial Average was down 1.8 points, or 0.01 percent, at 22,294.29, the S&P 500 was down 0.53 points, or 0.02 percent, at 2,496.13 and the Nasdaq Composite was down 1.82 points, or 0.03 percent, at 6,368.77.

Nine of the 11 major S&P sectors were higher, with the technology sector’s 0.22 percent rise leading the gainers.

The sector had taken a beating on Monday, recording its worst daily performance in five weeks, on increasing worries that the top-performing tech shares were falling out of favor.

Europe

Europe’s main stock markets mostly gained Tuesday, brushing off a drop in Tokyo as US-North Korea tensions flared once more.

Investors were looking ahead to Wednesday, when the government of French President Emmanuel Macron unveils its first annual budget against a background of wanting to cut taxes while also slashing the state deficit.

Nearing the half-way stage, Frankfurt’s DAX 30 index was up 0.2 percent compared with the close Monday and the Paris CAC 40 won 0.1 percent. London was flat.

The euro remained pressured as investors worried about looming political infighting in Germany after an election that won Angela Merkel a fourth term as chancellor, but gave a hard-right opposition party parliamentary seats for the first time.

Also in focus Tuesday for Germany and France was the maker of iconic TGV trains set to announce a merger with industrial leader Siemens in a giant and politically tricky deal that will create a new European champion.

The board of partly state-controlled Alstom, the manufacturer of French high-speed trains which are a source of national pride, is set to meet on Tuesday to discuss the tie-up with its German competitor.

Key figures around 10:15 GMT London — FTSE 100: Flat at 7,299.45 points

Frankfurt — DAX 30: Up 0.2 percent at 12,621.30

Paris — CAC 40: Up 0.1 percent at 5,270.31

EURO STOXX 50: Up 0.1 percent at 3,540.17

Tokyo — Nikkei 225: Down 0.3 percent at 20,330.19 (close)

Seoul — Kospi: Down 0.3 percent at 2,374.32 (close)

Hong Kong — Hang Seng: Up 0.1 percent at 27,513.01 (close)

Shanghai — Composite: Up 0.1 percent at 3,343.58 (close)

New York — DOW: Down 0.2 percent at 22,296.09 (close)

Euro/dollar: Down at $1.1807 from $1.1846 at 2100 GMT

Dollar/yen: Up at 111.70 yen from 111.68 yen

Pound/dollar: Up at $1.3480 from $1.3465

Oil — Brent North Sea: Down 39 cents at $58.63 per barrel

Oil — West Texas Intermediate: Down 26 cents at $51.96

Asia

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.

Ri said the regime of Kim Jong-Un had “every right to take counter-measures, including the right to shoot down US strategic bombers even when they are not yet inside the airspace border of our country”.

Tokyo’s Nikkei index ended 0.3 percent lower, while Seoul shed 0.3 percent. 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 percent and Paris lost 0.1 percent while Frankfurt retreated 0.3 percent.

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 $1.1820, having topped $1.20 on Friday.

Key figures around 0820 GMT Seoul — Kospi: Down 0.3 percent at 2,374.32 (close)

Tokyo — Nikkei 225: Down 0.3 percent at 20,330.19 (close)

Hong Kong — Hang Seng: Up 0.1 percent at 27,513.01 (close)

Shanghai — Composite: Up 0.1 percent at 3,343.58 (close)

London — FTSE 100: Down 0.2 percent at 7,290.22

Euro/dollar: Up at $1.1820 from $1.1846 at 2100 GMT

Dollar/yen: Down at 111.58 yen from 111.68 yen

Pound/dollar: Up at $1.3480 from $1.3465

Oil — West Texas Intermediate: Down 20 cents at $52.02 per barrel

Oil — Brent North Sea: Down 30 cents at $58.72

New York — DOW: Down 0.2 percent at 22,296.09 (close)

Oil

Brent oil prices fell on Tuesday after investors took profit following a rally to 26-month highs spurred largely by threats from Turkey to cut crude exports from Iraq’s Kurdistan region.

Brent crude futures fell 85 cents to $58.17 a barrel by 1405 GMT, having hit $59.49, the highest since July 2015 and more than 34 percent above their 2017 low.

US crude futures slid 54 cents to $51.68 a barrel, after hitting a fivemonth high of $52.43.

Turkish President Tayyip Erdogan repeated a threat to cut off the pipeline that carries 500,000-600,000 barrels per day (bpd) of crude from northern Iraq to the Turkish port of Ceyhan, intensifying pressure on the Kurdish autonomous region over its independence referendum.

This potential loss, combined with 1.8 million bpd of output reductions by the Organization of the Petroleum Exporting Countries and non-OPEC producers, raised concerns of tighter supply.

The Iraqi government said it will not hold talks with the Kurdistan Regional Government about the results of the referendum, which is expected to show a comfortable majority in favour of independence after the results are announced later this week.

Gold

Gold eased under pressure from the dollar on Tuesday, with investors booking profits after rising tensions between North Korea and the United States pushed the metal to a one-week high.

Spot gold was down 0.7 percent to $1,300.50 per ounce at 1345 GMT, after earlier marking its highest since Sept 20 at $1,313.54. It gained more than 1 percent the previous session.

US gold futures fell 0.6 percent to $1,303 per ounce.

The precious metal was hit by profit taking, but relations between North Korea and the United States continued to deteriorate, said Commerzbank commodity analyst Carsten Fritsch.

“Geopolitics haven’t come off the table. They are still front and centre but after a rally you tend to get a tiny bit of a pullback,” said ETF Securities commodity strategist Nitesh Shah.