Economy

Premarket: Shares rally, yen and gold fall as N. Korea tensions ease

Premarket: Shares rally, yen and gold fall as N. Korea tensions ease”

Trump had declared that the USA military was "locked and loaded" while Pyongyang threatened to fire four missiles into waters near the US territory of Guam.

The euro was flat on the day against the dollar at $1.1784, while the dollar index, which tracks the greenback against a basket of six major rivals, added 0.1 percent to 93.476 .DXY . WTI crude and Brent both last traded up on the day at $49.00 and $52.25 per barrel, up 0.4% and 0.2% on the day respectively.

After a week of jitters that sent stock markets worldwide tumbling, investor fears eased after South Korea's president said resolving North Korea's nuclear ambitions must be done peacefully and U.S. officials played down the risk of an imminent war.

Volatility gauges soared last week after markets were jolted by the sudden increase in tensions between the U.S. and North Korea.

However, the three major USA stocks indexes managed to break a three-day losing streak on Friday as the chances of another interest rate hike this year were reduced following a weaker-than-expected July consumer price data.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors will repatriate funds should a crisis take place.

"Aside from some political uncertainty that I believe the market will soon look beyond, earnings and economic data remain robust", said Mr Nick Savone, New York-based managing director at Morgan Stanley.

The Canadian dollar was trading at an average price of 78.71 cents U.S., down 0.12 of a cent.

Banks were among the top-gaining sectors, up 1.5 per cent, with Banco de Sabadell, Deutsche Bank and Commerzbank all up between 3.1 and 3.6 per cent.

The dollar rose to 109.57 yen from 109.19 yen late Friday.

Sterling was last trading at US$1.3007, up 0.25 per cent on the day.

We can expect the RBA to release its board minutes from its Monetary Policy Meeting.

Gold was out of favor on Monday after clocking a 2.46 percent jump and hitting two-month highs last week.

Tokyo's benchmark Nikkei 225 index lost 0.84 percent, or 164.76 points, to sit at 19,564.98 by the lunch break, while the broader Topix index of all first-section issues fell 0.82 percent, or 13.30 points, to 1,603.95. Its weekly gain of 2.6 per cent is the largest since June 2016.

"European equity markets appear to have left the fears of late last week behind, with investors coming out of their defensive positions to move back into riskier assets", said Joshua Mahony, market analyst at traders IG.

Oil prices steadied somewhat after falling more than 2.5 per cent on Monday to its lowest in about three weeks on the strength of the dollar and reduced refining in China.



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