Dave Lutz, head of ETFs at JonesTrading, has an overview of today’s markets.
- US markets are shrugging off President Trump’s “Fire and Fury” tweet aimed at North Korea.
- Asia markets are reacting, though. Japan and South Korea both lost ground.
- Gold is rising after the news, it’s up about 1%.
Good Morning! “Fire and Fury” is getting reaction, but not panic. Dow Futures off 20bp, while Nasdaq and Russell fall 50bp+. The headlines between Pyongyang and Washington caused the most stress in Japan and South Korea with both markets off over 1%. Samsung’s 3% loss weighed heavy in Korea, while that smallcap “mothers” index in Tokyo lost 2.5%. South Korea Won is off 1%. Some Havens on the move – $/Y falling below 110, Gold headed for biggest gain in a few weeks, US10YY dipping 2bp, and
VIX futures adding 5%. Aside from the Swissie Franc having biggest upside move in over 2 years — most of the moves are very muted. $/Y will be the key cross to watch, and they remain just below the week’s lows.
There is a decent pullback in European trading though, with the DAX down 1.3% – it’s worst showing in 3 weeks — while the FTSE is off 70bp as Banks weigh in London, but the Sterling drop is mitigating losses. Volumes are heavy, with most exchanges trading 150% normal volume, but it feels very driven with ETFs and Futures — as single stock trading seems quite muted. Away from japan and Korea, it was quiet elsewhere in Asia. Hang Seng lost 30bp – Shanghai down 20bp – Aussie climbed 40bp as the Big Banks started reporting. Keep your eye on the Sensex — it lost 70bp, dropping 700 points in 5 days(2.5%). Rhetoric is ramping between India and China.
Aside from the moves in the Swissie and Won — Most other currencies are quiet. The DXY is off small — Sterling is trying to retake $US1.3 after this week’s smackdown — The Loonie drifting near 3y lows, and the Rand still getting hit after the Zuma vote yesterday. Gold and Silver are up 1%+, but all metals are acting well with Ore and Rebar jumping over 3% as the Sichuan Earthquake sparks reconstruction thoughts. Energy Complex is up small, with Oil adding 40bp as a bigger Gasoline build is offsetting a bigger Oil draw
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