- Reuters / KCNA
It’s just the latest example of just how sensitive the low volatility environment in global markets can be to sudden, unexpected political developments. While stocks have stopped reacting as much to headlines around US President Donald Trump, this latest development in North Korea provides a reminder of the ever-present risk of geopolitical strife.
“An even greater crisis may be looming in Korea,” Greg Valliere, chief global strategist at Horizon Investments, said in a client note on Tuesdays morning. “Chances of strategic strikes on North Korean missile sites have increased significantly after a reckless missile launch last night that unnerved the Japanese. Trump’s generals have plans drawn up, yet they are urging him to delay any action – but sanctions and war games have their limits, and this issue is now the single greatest threat to financial markets.”
Here’s a round-up of the damage in stocks caused by North Korea’s decision to fire a missile over Japan:
- The benchmark S&P 500 declined 0.1% to 2,442.73 as of 1:01 p.m. ET after falling as much as 0.7% earlier in the day The more tech-heavy Nasdaq 100 climbed 0.3% after declining more than 0.9% in the morning hours The Dow nudged 0.1% higher after losing as much as 0.6% in the morning The CBOE Volatility Index – or VIX – climbed 5.2% to 11.91 following a 27% spike earlier in the day. The stock market fear gauge hit a record low last month, but has spiked several times over the past couple weeks on North Korea news
- Business Insider / Joe Ciolli, data from Bloomberg
- Japan’s Topix index declined as much as 0.7%, and eventually closed 0.2% lower South Korea’s Kospi index plunged as much as 1.6%, before paring that loss and finishing only 0.2% in the red The S&P/ASX 200 Index in Sydney decreased 0.7% Hong Kong’s Hang Seng Index lost 0.4% The Shanghai Composite Index fluctuated for much of its session before closing slightly higher
- The Stoxx Europe 600 index slid as much as 1.7% to the lowest intraday level in almost seven months The UK’s FTSE 100 index lost 0.8%, headed for the biggest drop in roughly three weeks Germany’s DAX index fell 1.4% to its weakest level in more than five months