It was a mixed start to the week for Asian markets, with Chinese markets rising, while those in Japan and Australia suffered losses linked to financials and export related shares. Hong Kong’s Hang Seng put in a solid performance, gaining 0.40%. Japan’s Nikkei was the top loser of the Asian session with 0.40% drop. Australia’s S&P/ASX 200 wasn’t far behind, falling 0.37%. Losses in both markets were offset somewhat by gains from oil and gas companies.
European markets were broadly lower for the third session in a row, with investors turning increasingly cautious as tensions between the U.S. and North Korea were re-ignited, and the upcoming Jackson Hole Summit has some questioning what messages might come from central bankers later this week. The U.S. and South Korea began their annual military exercises in South Korea over the weekend, prompting a warning from North Korea that the exercises are “reckless behavior, driving the situation into the uncontrollable phase of a nuclear war.” Germany’s DAX led losses in the region as it fell 0.82%, while French CAC 40 ended 0.52% lower.
U.S. markets struggled throughout the day Monday, trading in a tight range around unchanged levels, with low volumes keeping the markets from making any large moves. There was also a souring of investor sentiment as the tensions between North Korea and the U.S. ratcheted up over the weekend in response to the annual U.S./South Korean military exercises. With technology, energy and the financials all falling, markets ended with modest gains, although the Nasdaq was unable to recover and finished the day 0.05% lower. The S&P500 managed 0.12% gain, while the Dow was 0.13% higher at the close.
FOREX
EUR/USD
The pair recovered from its recent weakness and range bound trade on Monday, ending the session above the 1.1800 for the first time in over a week as the increased geopolitical tensions between the U.S. and North Korea caused broad based USD weakness. The Jackson Hole summit, beginning this Thursday, and comments coming out of that meeting of central bankers are likely to roil markets.
USD/JPY
The pair tested 108.50 level again, but the rebound off this support level wasn’t all that strong, with the pair remaining below the 109.00 handle at the close Monday. The uptick in tensions between the U.S. and North Korea have brought the safe-haven trade back in effect, and this time we may see USD/JPY break below the support at the 108.50 level, which could be the beginning of a massive decline.
Cryptocurrencies
Many cryptocurrencies fell on Monday, but Ethereum rallied higher on news that Falcon Private Bank in Switzerland will be adding Ethereum to its platform. Ripple also gained on rumors that the cryptocurrency is exploring avenues to the Chinese market. The gains for these two caused most other cryptocurrencies to retreat.
Commodities
Metals
Increasing global geopolitical risks and weakening US Dollar helped precious metals gain on Monday. Gold reached highest level in eleven weeks, nearly testing $1300 as the tensions between the U.S. and North Korea intensified. Silver also posted a modest gain, while palladium continued to trade at 16-year highs.
Oil
Crude traded lower for the first time in three sessions Monday as traders’ awaited news from OPEC producers meeting regarding adherence to production cuts, and expectations of increased U.S. production grew. WTI crude ended the session 2.4% lower, while Brent crude fell 2%.
Indices
NASDAQ
The technology-heavy Nasdaq was unable to recover as risk-aversion sentiment led investors away from cyclical sectors such as technology, and closed the day with a modest 0.05% loss. It was the third consecutive session that the Nasdaq posted a loss, and with rising geopolitical tension and the Jackson Hole summit commencing this Thursday there is a chance that the Nasdaq could remain under pressure all week.
FTSE100
London’s benchmark index ended Monday 0.07% lower, as most shares fell on the increased risk aversion in markets, but gains from the mining stocks capped potential losses for the British index. Fortescue Metals was 6.4% higher after it announced it was raising its dividend following a nearly doubling of profits. The news sent other mining shares higher as well, with BHP Billion and Rio Tinto (LON:RIO) gaining 1.1% and 0.8% respectively.
Stocks
Visa
While the financials in general headed lower on Monday, shares of Visa gained 0.7%, continuing the rally that has been ongoing since the start of 2017. In fact, since Visa went public in March 2008, the stock has returned over 600% to investors, handily beating market returns. And there is no slowdown in sight for the company, which recently reported better-than-expected Q2 revenues and earnings. While some investors worry that cryptocurrencies will harm Visa’s business, in truth the company is investigating using blockchain technologies, and continues to grow through strategic partnerships in the meantime.