Shares are punished again as Donald Trump ups the ante against Kim

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Shares took another battering on Friday and Wall Street’s “fear gauge” hit a nine-month high as US president Donald Trump stepped up his warmongering rhetoric against rogue state North Korea.

European shares were on course for their worst week this year as Trump inflamed tensions again in a week of growing diplomatic crisis, saying his earlier threat of “fire and fury” to Pyongyang in response to persistent US provocation “maybe wasn’t tough enough”. 

The secretive dictatorship threatened the US territory of Guam with a missile strike this week. North Korea’s leader Kim Jong-un is seeking nuclear ballistic missiles to maintain his regime.

North Korea’s estimated missile ranges, by admin

The latest comments from the President sent Asian markets lower, with South Korea’s Kospi index and shares in Hong Kong both down  1.7%. 

The latest tremors quickly spread to the West, putting major European stocks on course for a 2.8% fall. 

The FTSE 100 dropped 83.40 points, or 1.1%, to 7306.54, with falling mining, oil and banks stocks looking set to give the blue-chip index its worst week since November.

Investors sought out safe havens in government bonds as well as the yen, gold and the Swiss franc. 

The Vix, Wall Street’s gauge of the volatility in markets, briefly rose above 17 to its highest since Trump was elected last November, while the V-Stoxx, Europe’s equivalent measure, hit its highest for four months. Currency traders also sold off the Korean won. 

IG Group’s Josh Mahony said: “The UK headline index has crashed to the lowest level since late June, in a week which has turned from mundane to insane. 

“For a week that has been largely devoid of major economic releases, Donald Trump’s confrontational stance with North Korea has raised volatility across the board.”

BlueBay Asset Management’s Mark Dowding said the threat of war had been “overstated”: “We feel that market moves of the past week are likely to be reversed and calm to be restored over the next couple of weeks.”

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August 11, 2017 |
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