Strong message to North Korea
Asia nervous as Tillerson attempts to calm tension
Asian stocks fell again as the tension between the United States and North Korea showed no sign of easing.
Japan’s Nikkei handed back earlier gains while Shanghai dipped 0.3% and Hong Kong’s Hang Seng lost 1.3%. South Korea’s KOSPI dropped 1%, hit a two-month low to slide further from record highs at the end of July.
The markets have responded nervously to US President Donald Trump’s warning that he would respond to any threats by North Korea to its military base in Guam would be “met with fire and fury and, frankly, power the likes of which the world has never seen before”.
In comments designed to bring calm to the situation US Secretary of State Rex Tillerson said: “I think what the president was just reaffirming is that the United States has the capability to fully defend itself from any attack, and our allies, and we will do so. So the American people should sleep well at night.”
In defence of Trump’s comments he said, “What the president is doing is sending a strong message to North Korea in language that Kim Jong Un would understand, because he doesn’t seem to understand diplomatic language […] I think it was important that he deliver that message to avoid any miscalculation on their part.”
Analysts say there is no clear indication as to how the stand-off will play out but past experience shows financial markets remain largely resilient to what is still seen as sabre-rattling.
Wall Street shares closed only a shade lower.
The FTSE 100 closed the day slightly lower, giving back just over 44 points or 0.59% to 7,498.06, with the FTSE 250 down 0.37% at 19,875.03.
European markets followed suit with the DAX closing 1.12% lower at 12,154.00, and the CAC 40 down 1.40% at 5,145.70.
Sterling was relatively flat against the dollar at 1.3002, but gained 0.14% on the euro to 1.1072, with the single currency down by a similar degree against the dollar, which in turn was down 0.38% against the yen.