Gold jumps to almost one-year high
U.S. stock futures were trading firmly lower on Tuesday, after a North Korean missile test over Japanese airspace rattled investors and sent them searching for assets perceived more safe than stocks.
Futures for the Dow Jones Industrial Average slumped 125 points, or 0.6%, to 21,666, while those for the S&P 500 index lost 17.45 points, or 0.7%, to 2,426.25. Futures for the Nasdaq-100 index were down 52.75 points, or 9%, at 5,792.
The stock-index futures already started heading lower late Monday in New York after North Korea launched a ballistic missile over Japan, seen as another direct provocation that could destabilize the region (http://www.marketwatch.com/story/north-koreas-outrageous-missile-launch-over-japan-inflames-tensions-again-2017-08-29).
Japanese Prime Minister Shinzo Abe called the missile test an “unprecedented, grave and serious threat that seriously damages peace and security in the region.”
“[The missile launch] has impacted financial markets, with risk appetite being hit,” said Richard Perry, market analyst at Hantec Markets, in a note. “The main safe haven trades, such as gold, U.S. Treasuries and the yen have all strengthened, whilst the U.S. dollar and equities have been casualties.”
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U.S. President Donald Trump has previously said the U.S. would react with “fire and fury” if Pyongyang stepped up threats against the U.S. and its allies.
“Exactly how Trump responds to this threat could be crucial to the sustainability of key breaks on the likes of gold, which has broken above major resistance at $1,310 this morning,” Perry said.
Gold jumped $15.10, or 1.2%, to $1,330.70 an ounce, trading around the highest level since September. In other haven trading, the yield on 10-year U.S. Treasury notes fell 6 basis points to 2.097%, falling below 2.10% for the first time since November.
Stocks in Europe and Asia were also hit (http://www.marketwatch.com/story/asian-markets-jolted-by-north-korean-missile-test-over-japan-2017-08-28), with most benchmarks mired in red. Stocks in Europe suffered the biggest fall (http://www.marketwatch.com/story/dax-suffers-as-european-stocks-slide-to-6-month-low-on-north-korea-spurred-selloff-2017-08-29), with the Stoxx Europe 600 index down 1.4%.
The CBOE VIX Volatility index jumped some 25%, hitting 14.16, in the wake of the launch, and remained sharply higher (http://www.marketwatch.com/story/stock-market-fear-gauge-vix-remains-up-over-20-in-wake-of-latest-north-korean-action-2017-08-29) ahead of the U.S. stock market open. It was last at 13.75, up 21%.
Meanwhile, the ICE Dollar Index slid 0.5% to 91.788, its lowest since January 2015. The greenback fell to Yen108.46, compared with Yen109.26 late Monday in New York.
The dollar also suffered under uncertainty of how the devastating Hurricane Harvey that rampaged Texas over the weekend will hit the U.S. economy and impact the Federal Reserve rate decisions. The storm system is expected to make landfall again this week (http://www.marketwatch.com/story/harvey-set-to-pummel-flooded-houston-once-again-2017-08-29) and to add another 20 inches of rain for an total of 50 inches.
“The knock-on effects suggest dampened 3Q17 U.S. growth that may see the Fed deciding against raising interest rates again in 2017. While this may be too early to call, we do expect this thinking to weigh on the dollar in the near-term,” said analysts at ING in a note.
ReadCaroline Baum: No, hurricanes are not good for the economy (http://www.marketwatch.com/story/no-hurricanes-are-not-good-for-the-economy-2017-08-28)
And see:Hurricane Harvey highlights biggest impact of shale-oil revolution (http://www.marketwatch.com/story/oil-markets-harvey-reaction-a-product-of-shale-revolution-2017-08-28)
Gas prices continued higher, with the October contract up 0.3% on Tuesday to $1.58 a gallon. Crude oil prices gained 0.7% to $46.91 a barrel.
U.S. stocks ended little changed on Monday, as investors came to grips with Harvey’s impact. The Dow average slipped less than 0.1%, while the S&P 500 and Nasdaq Composite ended slightly higher.
Stock movers: Shares of oil refiners were among biggest advancers in Tuesday’s premarket trade, largely due to the fallout from Harvey. The storm is estimated to have reduced refining capacity along the Texas Gulf Coast by more than 2 million barrels a day, which help to lift fuel margins and benefit refiners.
Shares of Marathon Petroleum Corp.(MPC) were up 1%, and Anadarko Petroleum Corp.(APC) added 0.6%.
Shares of Finish Line Inc. (FINL) sank 26% in thin premarket trade after the athletics-wear company late Monday issued a profit warning (http://www.marketwatch.com/story/finish-line-slashes-forecast-adopts-poison-pill-2017-08-28) and approved a plan aimed at blocking any individual stockholder from owning more than 12.5% of the shares outstanding
Before the market opens, Best Buy Co. Inc.(BBY) is slated to report quarterly earnings.
Economic news: The Case-Shiller house price index for June is due at 9 a.m. Eastern Time, followed by the consumer confidence for August at 10 a.m. Eastern.
There were no Federal Reserve speakers on the docket for Tuesday.
(END) Dow Jones Newswires
August 29, 2017 06:37 ET (10:37 GMT)