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Where next for market after sell off?
As markets return to some semblance of normality following the geopolitical chest thumping between the US and North Korea, investors are moving back from their safe havens.
The escalating war of words briefly sent investors scurrying into safety-first assets such as gold, bonds and select currencies.
After President Donald Trump threatened North Korea with ‘fire and fury’ the FTSE 100 endured three days of consecutive losses which wiped off 3.1% of its value. Those stocks with the most exposure to the global markets were hardest hit, including miners and banks.
Among the FTSE 100 stocks down was HSBC (HSBA) which dropped 35.8p to 734.5p from open on 9 August to close Friday 11 August.
Pharma players also did not have a great time during the increasingly bellicose exchanges between the two states, with GlaxoSmithKline (GSK) and Shire (SHP) dropping 59.5p to £14.75 and 261.5p to £38.01, respectively.
Of course, when there’s talk of being ‘locked and loaded’ and other macho lines regarding military might, defence stocks tend to do well. BAE Systems (BA.) climbing 6.5p to 582p from through the volatility.
However, as this is a US issue, it’s the American-listed defence names that did well from the escalating war of words.
Missile companies Lockheed Martin and Raytheon hitting record highs.
Now calm has returned to the markets, with South Korea’s exchange and currency both up. There has been a global rebound, with equities up across the globe.
In the box there are details of some of the scheduled announcements which could have a bearing on the future direction of markets in the coming weeks. As the North Korean episode demonstrates though there is little investors can do to prepare for external shocks.
And as discussed in last week’s Editor’s View article, for most long-term investors it makes sense to hold your nerve and stay invested even when markets get choppy.