Markets

Stocks around the world are sliding after North Korea’s missile test


Reuters / KCNA

North Korea has once again ratcheted up geopolitical tensions
with its
most recent missile test
, and the effects are being felt in
stock
markets worldwide
.

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:

US

  • The benchmark S&P
    500
    declined 0.3% to 2,436.13 as of 10:04 a.m. ET
  • The more tech-heavy Nasdaq
    100
     slid 0.3%
  • The Dow
    traded 0.2% lower
  • The CBOE Volatility
    Index
    — or VIX — surged 12% to 12.73. 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


S&P 2 dayBusiness
Insider / Joe Ciolli, data from Bloomberg

Asia

  • 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

Europe

  • The Stoxx Europe 600 index slid 1.3% to the lowest in almost
    seven months
  • The UK’s FTSE 100 index lost 1.1%, headed for the biggest
    drop in roughly three weeks
  • Germany’s DAX index fell 1.7% to its weakest level in more
    than five months

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