European Stocks Called Lower, Global Markets Retreat Amid Rising Political Risks
European stocks are expected to open lower Wednesday as global investors retrench to safety following the biggest single-day loss for U.S. markets in three weeks amid ongoing concern over President Donald Trump's handling of the crisis in North Korea.
Markets in Europe are looking at 0.4% to 0.6% gains across the board, according to financial bookmakers IG, with London's FTSE 100 likely to get some support from rising gold prices, which tested another 11-month high overnight amid the flight-to-safety trading that took the price of the bullion to just under $1,340 an ounce.
Stocks in Asia followed Wall Street's gloomy assessment of global geopolitics, with the MSCI Asia ex-Japan index falling 0.1% and Japan's Nikkei 225 slumping to a near four-month low as the yen gained against the dollar and held down any chance of gains for export-focused stocks.
The yen itself had its biggest single-day gain in three weeks, rising to has high as 1.8030 before easing later in the session as falling U.S. Treasury bond yields clipped the dollar's gains.
Benchmark 10-year Treasury yields extended their declines overnight, falling to a 10-month low of 2.06% as traders piled cash into government bond positions and added further to the move after U.S. Federal Reserve rate-setter Lael Brainard said inflation was "well below" the central bank's target.
Global oil prices were also under pressure as investors re-set assumptions for near-term demand following the damage from Hurricane Harvey in and around the heart of the U.S. petrochemicals industry in Houston and the broader Gulf region.
West Texas Intermediate crude futures for October delivery were marked 10 cents lower from their Tuesday close in New York at $48.56 per barrel at the start of European trading while Brent contracts for November were seen 0.48% lower at $53.12.
Wall Street futures suggest the possibility for a modest rebound at the start of trading, with the Dow Jones Industrial Average priced to gain around 15.5 points after yesterday's 1% sell-off took more than 234 points from the benchmark by the end of the session.
The S&P 500, which fell 0.93% for its biggest one-day decline since early August, is poised to rise around 2.5 points at the bell while the Nasdaq may gain back around 9 of the near 60 points it lost in Tuesday's selling.
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