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Sydney - Markets attempted to stabilise as investors digested a host of catalysts from North Korean war threats and central-bank policy to tailwinds for oil and the aftermath of the German election. The euro weakened as European stocks drifted, while safe havens such as gold took a breather after rallying on Monday.
The yellow metal and the Swiss franc pared some of yesterday’s gains, which followed North Korea’s declaration it could shoot down US warplanes. Emerging-market stocks headed for only their second four-day retreat this year, while equities were directionless in Europe as America continues to pursue a diplomatic solution to the crisis.
WTI crude fell, but remained close to a five-month high after also surging on Monday as Turkey threatened to shut down Kurdish crude shipments.
Markets seem to have been oscillating between risk-on and risk-off stances since early August as tensions simmer on the Korean Peninsula. Equities have edged away from recent record highs as the US and North Korea trade threats, and now an assortment of global political risks look set to further cloud the outlook.
Alongside geopolitics, this week’s bevy of central bank speakers continues to offer more clues to the path of monetary policy and the fate of stimulus.
It’s Federal Reserve Chair Janet Yellen’s turn on Tuesday, who will weigh in as policy makers continue to disagree on whether to raise US interest rates again this year. Finally investors will be monitoring the ongoing saga that President Donald Trump’s domestic policies have become in a bid to gauge the chances of any meaningful tax reform in the world’s biggest economy.
What to watch out for this week:
• The central bank speaking roster continues.
• Markets will be watching a speech by the Fed’s Yellen on Tuesday.
• Later in the week, Bank of England Governor Mark Carney appears, as does soon-to-depart Fed Vice chairperson Stanley Fischer.
• US data on new-home sales on Tuesday and durable-goods orders, GDP and personal spending later in the week will provide further clues as to the Fed’s policy path.
• Brexit negotiations are getting underway again.
• Spanish Prime Minister Mariano Rajoy will meet US President Donald Trump in Washington on Tuesday while his team back in Madrid attempts to turn the screws on a secessionist push in Catalonia.
• The eurozone inflation rate may have accelerated a touch to 1.6% in September from 1.5% but the core will probably remain at 1.2% when data is out on Friday.
And here are the main moves in markets:
Asia
• Japan’s Topix index closed flat after trading in a narrow range.
• South Korea’s Kospi index fell 0.3% and Australia’s S&P/ASX 200 Index lost 0.2%.
• Hong Kong’s Hang Seng Index added 0.1% after slumping 1.4% on Monday as Chinese property developers tumbled on fresh mainland home curbs.
• The Japanese yen declined less than 0.05% to 111.74 per dollar.
Stocks
• The Stoxx Europe 600 Index gained less than 0.05% as of 10:02.
• The MSCI All-Country World Index dipped 0.2% to the lowest in more than two weeks.
• The UK’s FTSE 100 Index declined 0.2%, the largest drop in more than a week.
• Germany’s DAX Index fell less than 0.05%.
• The MSCI Emerging Market Index sank 0.5% to the lowest in four weeks.
• Futures on the S&P 500 Index decreased 0.1% to the lowest in more than a week.
Currencies
• The Bloomberg Dollar Spot Index increased 0.2% to the highest in almost four weeks.
• The euro dipped 0.3% to $1.1814, the weakest in more than a month.
• The British pound advanced 0.1% to $1.3481.
Bonds
• The yield on 10-year Treasuries advanced less than one basis point to 2.22%.
• Germany’s 10-year yield advanced one basis point to 0.41%.
• Britain’s 10-year yield climbed one basis point to 1.346%.
Commodities
• Gold declined 0.4% to $1 305.60 an ounce.
• West Texas Intermediate crude fell 0.4% to $52.00 a barrel, the largest fall in a week.
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