US president Donald Trump has thwarted the Dow Jones’ nine-day winning streak with threats of “fire and fury” against North Korea as the Vix reaches a monthly high.
While markets shrugged off news earlier in the day that North Korea had developed nuclear warheads, Trump’s threatening reaction later in the day prompted a more nervous reaction from investors.
“North Korea best not make any more threats to the United States,” Trump told journalists from his New Jersey gold club. “They will be met with fire and the fury like the world has never seen.”
Pyongyang has responded that it is eyeing attacks on US military bases in Guam.
Wall St’s three major indexes ended the day down with the Dow Jones Industrial Average down 0.15 per cent, while the S&P 500 lost 0.24 per cent and the Nasdaq Composite losing 0.21 per cent.
Markets opened down across Europe, with the FTSE 100 losing 44 points in early trading hitting 7,499.42.
The Vix, also known as the ‘fear index’, closed at 10.96, its highest level in a month.
Safe haven assets, such as US Treasuries, the yen and gold, edged up on the news with the latter creeping up to $1,265.18 an ounce.
ETF Securities commodities strategist Nitesh Shah believes continued sabre-rattling between the two nuclear powers could take gold prices higher still.
“As ever with Trump it’s unclear how quickly the rest of the US machinery will calm him, so rises are not yet huge.”