Investing.com - Here are the top five things you need to know in financial markets on Wednesday, August 9:
1. Focus on faceoff between Trump and North Korea
Markets continued to react Wednesday to the faceoff between U.S. President Donald Trump and North Korea.
Before the close Tuesday on Wall Street, President Trump’s remarks that North Korea would face "fire and fury like the world has never seen" hit U.S. stocks.
North Korea did not take the “warning” lying down and, just hours later, a spokesman for the Korean People's Army said in a statement it was "carefully examining" plans for a missile attack on the U.S. Pacific territory of Guam, which has a large U.S. military base.
Investors reacted with a risk-off stance despite that fact that experts suggested that an escalation to nuclear proportions was highly unlikely.
2. Swiss franc logs biggest gain since Brexit as investors flock to safe havens
The flight to safety on the back of geopolitical tension surrounding North Korea put the Swiss franc on track to log its largest daily gain against the euro since the U.K. voted to leave the European Union, known as Brexit. EUR/CHF was last down 1.13% at 1.1319 by 5:57AM ET (9:57GMT), putting it on track for the largest one day decline in more than two years.
The Swissy, which is often sought in times of geopolitical tension or market turbulence, was also sharply higher against dollar. USD/CHF touched a low of 0.9614, the weakest since July 27. It was last off 1.05% at 0.9641 by 5:58AM ET (9:58GMT).
Market players also flocked to the yen, another safe haven currency. USD/JPY was last down 0.51% at 109.77 by 5:58AM ET (9:58GMT).
Investors also jumped into gold as the precious metal bounced back from what been its weakest level since July 26. Comex gold futures jumped $10.77, or around 0.9%, to $1,273.37 a troy ounce by 5:59AM ET (9:59GMT).
Additionally, yields on core government debt fell as market participants looking for safety piled into fixed income. Ten-year U.S. yields dropped 4 basis points (bps) to 2.242% by 6:00AM ET (10:00GMT) while German equivalents fell 3.8 bps to 0.435%.
3. Global stocks lower as risk appetite hit
President Donald Trump's warning North Korea faced "fire and fury" and Pyongyang's response it was considering an attack on Guam drove investors out of stocks on Wednesday.
Following an initial downturn on Wall Street, investors took the cue and moved out of Asian equities with Japan’s Nikkei notably closing down 1.3%.
Apart from worries over North Korea, European bourses were further hit by concern over reports that a car hit a group of soldiers in a suburb of Paris on Wednesday, in what was described as a deliberate act. At 6:03AM ET (10:03GMT), the European benchmark Euro Stoxx 50 lost 1.52%, Germany’s DAX fell 1.27%, while London's FTSE 100 traded down 0.83%.
U.S. futures pointed to a continuation of investor caution, suggesting a lower open on Wednesday. At 6:00AM ET (10:00GMT), the blue-chip Dow futures fell 0.15%, S&P 500 futures declined 0.40% while the Nasdaq 100 futures declined 0.61%.
4. Disney slumps as earnings season wind down
Shares of Disney (NYSE:DIS) sank more than 3% in pre-market trade Wednesday after the entertainment giant reported a 9% drop in profit and announced that it would stop providing new movies to Netflix (NASDAQ:NFLX) in a bet to provide its own subscription service that met skepticism over costs and capability from investors.
Despite the market reaction to Disney’s numbers, the second-quarter reporting season has been largely positive. With 445 of the S&P 500 companies already having released figures, 73% have beat profit forecasts while 70% topped consensus sales estimates.
Wednesday will be a relatively quiet session with a handful of earnings from the likes of Office Depot (NASDAQ:ODP), 21st Century Fox (NASDAQ:FOXA), Wendy’s (NASDAQ:WEN) or Mylan (NASDAQ:MYL), as investors brace for a round of results from brick-and-mortar retailers such as Macy’s Inc (NYSE:M), Kohl’s (NYSE:KSS), Nordstrom (NYSE:JWN) and JC Penney (NYSE:JCP) or recent IPOs such as Snap (NYSE:SNAP) and Blue Apron (NYSE:APRN) in the final two days of the week.
5. Oil breaks two-day losing streak ahead of inventories
Oil underwent choppy trade on Wednesday, but managed to return slight gains in early morning North American trade as those investors appeared to take heart in a large decline in U.S. crude inventories.
After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories fell by 7.89 million barrels in the week ended August 4, compared to expectations for a decline of just 2.2 million.
The U.S. Energy Information Administration will release its official weekly data at 10:30AM ET (14:30GMT) amid forecasts for a draw of 2.72 million barrels.
U.S. crude oil futures gained 0.41% to $49.37 at 6:04AM ET (10:04GMT), while Brent oil traded up 0.35% to $52.32.