EUROPE MARKETS: European Stocks Drop After North Korea Tests Its Nuclear Arsenal
Analyst: 'Another week, another provocation'
Stocks across Europe dropped Monday, with so-called risk assets rattled after North Korea conducted another nuclear bomb test and was said to be preparing for a possible launch of another intercontinental ballistic missile.
The Stoxx Europe 600 index fell 0.6% to 373.95, led by tech, health care and industrials shares. But consumer-services and commodity stocks were able to advance. The decline in stocks came after North Korea on Sunday conducted its sixth and most powerful nuclear test (http://www.marketwatch.com/story/we-have-many-military-options-mattis-warns-north-korea-2017-09-03).
On Monday, media reports from South Korea said Pyonyang appeared to making preparations for the possible launch of another long-range ballistic missile (http://www.marketwatch.com/story/north-korea-is-getting-ready-for-another-possible-icbm-launch-says-south-korea-2017-09-04).
"Another week, another provocation, as North Korea re-emerges as the key driver of market sentiment," said IG market analyst Josh Mahony in a note "Unfortunately, there is unlikely to be any end in sight for this current standoff with North Korea, with few options seemingly on the table to demilitarize the regime."
The U.N. Security Council will hold an emergency meeting on Monday. U.S. Defense Secretary James Mattis on Sunday warned North Korea that any attack on the U.S. or its allies would be met with a massive military response (http://www.marketwatch.com/story/we-have-many-military-options-mattis-warns-north-korea-2017-09-03).
"One thing is for sure, with North Korea testing increasingly threatening weapons, the growing threat of a nuclear war is going to continue bolstering gold prices, which today hit an almost one-year high," said Mahony.
Considered a haven at times of geopolitical stress, gold (http://www.marketwatch.com/story/gold-rises-near-1-year-high-after-north-korea-tests-nuclear-bomb-2017-09-04) leapt 1% to $1,343 an ounce and briefly hit $1,343.50, around its highest since early September 2016. That supported gains for gold miners on the Stoxx 600. Shares of Polymetal International PLC (POLY.LN) bounced up 2.9%, Centamin PLC rose 2.5% and Randgold Resources Ltd. (RRS.LN) picked up 2%.
South Korea's Kospi Index closed down by 1.2%, but managed to finish off session lows (http://www.marketwatch.com/story/wary-investors-weigh-on-asian-markets-after-north-korean-nuclear-test-2017-09-03).
The euro rose to $1.1911 from $1.1863 late Friday in New York. The fell against major rivals, including the Swiss franc and the Japanese yen , considered haven plays.
The dollar bought 95.78 Swiss franc, down from 96.48 late Friday.
While investors will watch for developments surrounding North Korea, the European Central Bank will be in focus as it's set to release its latest policy decision on Thursday. There's been speculation that the ECB may reducing its bond-buying program of EUR60 billion a month, which is currently scheduled to run through December.
Stock movers: Novartis AG (NOVN.EB) fell 0.7% after the Swiss pharmaceutical company said its Chief Executive Joe Jimenez will step down in January after leading company for eight years. (http://www.marketwatch.com/story/novartis-ceo-to-step-down-in-january-2017-09-04-44852256)
Indexes: Germany's DAX 30 index fell 0.5% to 12,083.59 and France's CAC 30 index gave up 0.4% at 5,102.92. Spain's IBEX 35 fell 0.7% to 10,249.70.
In London, the FTSE 100 was down 0.1% at 7,430.32.
(END) Dow Jones Newswires
September 04, 2017 05:50 ET (09:50 GMT)