Commodities Rally on US and North Korean Tensions

Blue image of globe

It’s tense times right now. I’m sure you’ve heard all about the North Korean missile that flew right over Japanese heads.

The missile fell around 1,180 km from the Japanese coastline, as shown below.

 

North Korea Missile Over Japan - 30-08-17

Source: CNN

The North Korean news agency, KCNA, acknowledged the missile launch. They reported that the North Korean leader guided the launch of the Hwasong-12 intermediate-range ballistic missile over Japan.

They also said the launch was a strong message in response to the ongoing joint US–South Korean military exercise in the southern half of the Korean peninsula.

And as you would imagine, US President Donald Trump got the message loud and clear.

Trump has vowed not to let the rogue state develop nuclear missiles that could reach the US mainland. But since North Korea has refused to back down, a dose of uncertainty has been thrown into the market.

Riskier assets like equities have stumbled recently. From 31 July to present, the S&P 500 is down 1.2%.

Gold Price Rallies

The value of safe havens like gold have also rallied in the past few days. For the first time in 2017, the price of gold rallied above US$1,300 an ounce.

Even the price of copper is hitting three year highs. The price of iron ore has also rallied more than 8% in the last month.

Should the situation between the US and North Korea continue to worsen, you could see more of the same results, but exaggerated.

Regards,

Härje Ronngard,

Junior Analyst, Markets and Money

PS: The stock market is an unpredictable place; you never know what’s around the corner or how investors might react. However, there are stocks that are overvalued which you should get rid of today. Find out more by clicking here.

Härje Ronngard

Härje Ronngard

Harje Ronngard is a Junior Analyst at Markets and Money.

With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation.  

Härje Ronngard

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