Global stock markets wobbled yesterday on investor jitters over North Korea’s latest sabre-rattling.
London’s FTSE 100 gained 0.1% at 7,367.60 points, Frankfurt’s DAX 30 was up 0.1% and in Paris CAC 40 rose 0.1% at 5,180.10 at close yesterday as a weaker pound and euro against the dollar supported their exporting sectors.
Wall Street initially eked out small gains as investors returned from the US Independence Day holiday, but turned negative approaching midday in New York.
Investors “are not ignoring the bout of risk aversion triggered by North Korea’s ongoing missile tests,” said analyst Naeem Aslam at trading firm Think markets.
“The geopolitical tensions remain a major threat for the global stability and economic health and traders would not ignore this fact.”
Traders ran for the sidelines after Washington confirmed that Pyongyang had for the first time tested a missile capable of reaching the US, ratcheting up pressure on the already tense Korean peninsula.
Investors meanwhile waited yesterday’s publication of minutes from the US central bank’s most recent meeting, ahead of key jobs data tomorrow.
“The Federal Reserve will release the minutes from the June meeting and investors will get an insight into what the US central bank was thinking when it raised interest rates for the second time this year,” said CMC markets analyst David Madden.
“Since then, Janet Yellen, the chair of the Federal Reserve, announced there will be further monetary tightening, but it will be ‘timely and predictable’.”
The Fed last month raised its benchmark interest rate by a quarter point to 1%-1.25%.
The US central bank said it expected to lift borrowing costs for a third time this year, brushing aside weaker inflation and consumption data in recent weeks.
Speculation that the minutes, to be published after the European markets’ close, will point to a tightening bias propped up the dollar against rival currencies.
Shares in British payment processing firm WorlDPAy fell nearly 10% after it agreed to merge with its US peer Vantiv. The stock had risen 28% on Tuesday on expectations of a takeover battle for the UK company, but potential bidding rival JP Morgan Chase said yesterday that it would not pursue WorlDPAy any further, causing the shares to fall back.
The oil price slipped, which traders attributed to reports saying that Opec’s production rose in June, casting doubt on an early re-balancing of the global oil market.
Safen haven assets the yen and gold both rose as geopolitics turned investors off riskier choices.