Financial market research and analysis

Escalating rhetoric between the United States and North Korea rattled investors in Asia. Stocks were mostly lower while investors sought the haven of gold, the Japanese yen and government bonds in case there were actually a strike. Safe haven demand pushed the Japanese yen to an 8-week high as USDJPY broke below key support at 110. In turn the Nikkei index dropped, as did the Hang Seng.

Donald Trump’s warning that any more threats to the US would be met with “fire and furry” was met with another threat to pre-emptively attack the US Pacific territory of Guam. North Korea has been a worry simmering in the background for a long time but with its more advanced weapons and Trump ready to act in the White House, it could bubble over anytime.

The threat from North Korea seems to have jolted investors out of their summer slumber. A lower European open on Wednesday looks set to unwind the small losses obtained on Tuesday and matches the soft finish on Wall Street. The FTSE 100 is set to open lower ahead of earnings from Legal and General and G4S. Data showing a levelling out of producer price inflation and a slightly slower pace of consumer inflation in China may give cause for some relief in mining stocks.

Futures point to a lower open on Wall Street with shares of Disney and Netflix set to fall in the region of 3%. Disney reported falling profits and announced plans to launch a standalone online media streaming service, putting it in direct completion with Netflix. It’s a risk for content-providers to strike out on their own, but Disney has the resources to pull it off and fewer ESPN subscribers means chief executive Bog Iger’s hand has been forced online.

The euro failed to hold onto the 1.18 level and the pound is hovering around 1.30, continuing a spell of weakness as the market eases back on bearish dollar sentiment following last week’s US jobs report. Italian industrial production is expected to grow at a slower pace in June but that should lift the annual growth to a healthy 3.4%.

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