August 10, 2017
U.S. allies add to Korea warnings, risk-off mood continues in markets, and Glencore gets ready for a shopping trip. Here are some of the things people in markets are talking about today.
North Korea warnings
Japan and South Korea said that Pyongyang would face a strong response if it followed through on a threat to launch missiles towards the U.S. territory of Guam. The warning came after U.S. Secretary of State Rex Tillerson tried to calm tensions yesterday, saying “Americans should sleep well at night” despite the recent increase in heated rhetoric. White House aides said the policy failures of previous administrations have forced President Donald Trump to rethink U.S. strategy towards the regime.
Pricing Armageddon Markets continue to favor haven assets, with gold continuing to rise and the yen trading under 110 to the dollar. Overnight, the MSCI Asia Pacific Index fell 0.5 percent, while Japan’s Topix index closed less than 0.1 percent lower. In Europe, the Stoxx 600 Index was down 0.6 percent by 5:25 a.m. Eastern Time with banks among the worst performers. S&P 500 futures slipped 0.4 percent. It is perhaps surprising that the moves haven’t been larger considering what’s at stake, but as Timothy Ash, a senior strategist at Bluebay Asset Management in London, says: “It’s hard to price a potentially extinction event.”
Glencore war chest
Glencore Plc saw earnings surge 68 percent in the first half of the year as commodity prices rallied, but decided to keep the dividend unchanged as it paid down debt and strengthens its balance sheet. Chief Executive Officer Ivan Glasenberg said in a statement this morning that the company has “headroom for highly selective growth opportunities.” His comments come as mineral exploration globally is starting to pick up, driven by metal prices at multi-year highs.
Kohl’s Corp., Macy’s Inc. and Nordstrom Inc. all report results today as investors continue to worry about the fate of traditional retailers in the face of competition from Amazon.com Inc. Last week’s payrolls report showed that employment growth in the U.S. retail industry dipped into negative territory for the first time since 2010. Kohls and Macy’s report pre-market, and Nordstrom after the close.
Ahead of tomorrow’s U.S. inflation numbers, we get factory-gate price data at 8:30 a.m. this morning. Weekly initial jobless claims numbers are due at the same time, with expectations for a repeat of last week’s 240,000 new claims. There are also rate decisions due in Mexico – where no change is expected – and Peru.