Worries about North Korea weighed on global stocks Tuesday, especially in New York, as investors avoided equities and sought bonds and other safe investments.
UN Secretary General Antonio Guterres warned against using “confrontational rhetoric” towards North Korea and urged big powers to come up with a single strategy to address the crisis as they sparred over a response to Pyongyang’s provocations.
US stocks, in their first day of trading after a long holiday weekend, fell sharply while refuge investments like gold gained.
The broad-based S&P 500 shed 0.8 percent with financial shares like Bank of America and Goldman Sachs falling more than three percent as investors fled into US Treasury bonds, a low-risk asset, which was expected to crimp net interest margins, a key source of bank profits.
The latest back-and-forth at the UN sharpened the sense North Korea was becoming “a permanent part of the investor psychology right now and that causes a flight to safety,” said Art Hogan, chief market strategist at Wunderlich Securities.
At the same time, an increasingly jammed legislative calendar in Washington weighed on sentiment, dimming the odds to “pivot quickly to tax reform,” he said.
President Donald Trump’s decision Tuesday to end an amnesty program for 800,000 people brought to the United States illegally as young children adds another thorny debate to the mix, Hogan said.
Stocks in Asia and Europe had fallen Monday in response to the unfolding drama, but investors took a somewhat more sanguine approach on Tuesday, dealers said.
Paris fell 0.3 percent and London lost 0.5 percent, while Frankfurt edged up 0.2 percent, boosted in part by auto shares.
Chancellor Angela Merkel on Monday pledged a billion euros to help German cities fight air pollution caused by dirty diesel cars, while coming out solidly against cities banning the vehicles which would hurt automakers.
Oil prices bounced as some Texas petroleum refineries shuttered by Hurricane Harvey returned to service after plant damage proved less than the market feared. That boosted demand for crude oil.
But markets also were grappling with yet another potentially catastrophic storm, Hurricane Irma, which was moving west and was expected to hit a string of islands including Guadeloupe late Tuesday before heading to Haiti and Florida.
Orange juice futures surged on worries that Irma would devastate Florida’s orange crop.
Key figures around 2040 GMT –
New York – DOW: DOWN 1.1 percent at 21,753.31 (close)
New York – S&P 500: DOWN 0.8 percent at 2,457.85 (close)
New York – Nasdaq: DOWN 0.9 percent at 6,375.57 (close)
London – FTSE 100: DOWN 0.5 percent at 7,372.92 points (close), Frankfurt – DAX 30: UP 0.2 percent at 12,123.71 (close), Paris – CAC 40: DOWN 0.3 percent at 5,086.56 (close)
EURO STOXX 50: DOWN 0.2 percent at 3,422.63
Tokyo – Nikkei 225: DOWN 0.6 percent at 19,385.81 (close)
Seoul – Kospi: DOWN 0.1 percent at 2,326.62 (close)
Hong Kong – Hang Seng: FLAT at 27,741.35 (close)
Shanghai – Composite: UP 0.1 percent at 3,384.32 (close)
Euro/dollar: DOWN at $1.1914 from $1.1919 at 2100 GMT on Monday
Pound/dollar: UP at $1.3031 from $1.2944
Dollar/yen: DOWN at 108.79 yen from 109.60 yen
Oil – Brent North Sea: UP $1.04 at $53.38 per barrel
Oil – West Texas Intermediate: UP $1.37 at $48.66, reports AFP, New York.