Trump vows to respond to North Korean threats with 'fire and fury'

Iain Gilbert Sharecast | 09 Aug, 2017 08:56 - Updated: 12:11 | | |

pour-trump-kim-jong-un-est-un-fou-avec-des-armes-nucleaires

On Tuesday night, North Korean leader Kim Jong-un warned of potential attacks on the US airbase on the remote Pacific island of Guam after Donald Trump warned the leader that continued threats to America would result in a response of "fire and fury and frankly, power the likes of which the world has never seen."

The North Korean regime responded by saying that it was "carefully examining" a plan of "enveloping fire" towards the Anderson air force base in Guam, stating it would be prepared to use its stockpile of medium to long-range missiles to "contain" the base unless the US put a stop to its "reckless military provocation," referring to a bilateral mission between South Korea and Japan on Monday evening.

North Korea said the exercise "proves that the US imperialists are nuclear war maniacs".

Former Republican presidential candidate, John McCain, said of the President's statements, "That kind of rhetoric, I'm not sure how it helps". The Arms Control Association warned the threats were "dangerous, reckless and counterproductive."

A spokesman for the Korean People's Army said the party had a strike plan prepared to be "put into practice in a multi-current and consecutive way any moment," when speaking to North Korean state-run news outlet KCNA.

Pyongyang's warning comes after trade sanctions proposed by the White House were put into effect over the weekend, for which it had previously told the US it would "pay dearly." Reluctantly signed by both Russia and China, the sanctions blocked the North to over a third of its export revenue, a blow to the country's economy and a draining of the resources its leader was relying on to develop his nuclear program.

Of the sanctions, Chinese foreign minister Wang Yi said: "Owing to China's traditional economic ties with North Korea, it will mainly be China paying the price for implementing the resolution."

Wang continued, "But in order to protect the international non-proliferation system and regional peace and stability, China will as before fully and strictly properly implement the entire contents of the relevant resolution," continued Wang, despite previous complaints from China's government that "normal" trade and ordinary North Koreans should not be affected.

Japan, who just held its first air-raid drills since World War Two as a result of the "thousand fold" retaliatory threats from Pyongyang, has said it believes that the North is likely to have created an atomic warhead small enough to fit on its Hwasong-12 missiles, the final hurdle in taking its nuclear programme live.

EFFECT ON FINANCIAL MARKETS

All major US markets closed lower for the first time in over two weeks on the back of that news, selling carried over into Asian trading hours with the Hang Seng and Nikkei both registering falls.

All European markets opened lower this morning as the heightened geopolitical tensions in the wake of the comments made by the US President provoked a risk-off trade attitude among investors as they sought out gold as a hedge against the risk of unforeseen occurrences.

“Other riskier assets have quickly found bid again and stocks may therefore recover pretty sharpish if this proves no more than a temporary war of words," said Neil Wilson at ETX Capital. "Indeed overall the risk-off moves are not enormous for the time being, but we await developments."

He noted that the Dow snapped its run but the selling was "pretty modest", while moves in the Vix volatility index has only risen to a level last seen a month ago, while the Dow gave up a "paltry" 33 points after a streak of nine-straight record closes and the habitual safe haven of gold only rose to its highest since Friday, implying that there is not much risk being taken away yet.

Looking back in history for a guide, Wilson pointed out that during the Cuban missile crisis in the 1960s, the S&P 500 was "pretty steady throughout October so the stock market is not always a great guide to impending nuclear war. But the index had already cratered by about 28% in the six months leading up to the crisis (The Kennedy Slide) so maybe had already priced in the potential for a Cold War miscalculation to a large extent.

"Conditions today are very different with a near-decade long bull market leaving valuations extremely high. A spark from the Korean peninsula – even if it fizzles out and doesn’t lead to war – could yet set off a correction, particularly given the time of year," he said, referring to the thin trading volumes of the summer.

More news

10:30 Real Good Food warns of full-year loss

Baking ingredients business Real Good Food warned on Monday that it will report a loss for the year as higher costs and currency movements take their toll.

10:24 Government's new housebuilding plans 'could end cosy climate for builders'

The government has proposed a major state housebuilding push to ease the housing crisis, with one side-effect being an end to the "cosy and golden trading climate" that large building companies currently enjoy.

10:20 Europe open: Stocks flat, investors mull political news on euro area periphery

European stocks have started the week little changed, albeit amid a tad of weakness in periphery stocks given political events at the weekend and not only in Spain.

10:09 Arqiva announces plans for London listing

Broadcast and mobile masts company Arqiva has announced its intention to float on the London Stock Exchange in a £6bn listing.

09:55 Essentra returns to revenue growth, but profits hit by hurricanes

In the third quarter Essentra returned to like-for-like revenue growth for the first time in almost two years, though full year margins for the plastics and packaging group will be dented by the impact of Hurricane Maria on its Puerto Rico sites.

09:53 Clinigen buys Japanese medicine supplier

AIM-listed pharmaceutical and services company Clinigen has acquired International Medical Management Corporation (IMMC), Japan's largest supplier of unlicensed medicines, for an undisclosed sum.

09:29 Petra revenue and production drop on diamonds seizure, labour disruptions

Petra Diamonds posted a 4% drop in production and a 17% decline in revenue for the first quarter.

09:10 Interserve secures £140m contract extension with BBC

Support services and construction group Interserve has won a £140m contract with the BBC to continue providing facilities services until 2023.

09:07 London open: Stocks dip down in quiet start to busy week

London stocks nudged lower in early trade amid a lack of market-moving news, with the economic calendar set to get busier later in the week.

08:24 Capita's sale of Asset Services arm nears completion

Capita expects to complete the sale of its Asset Services businesses to Link Administration a week on Friday.