Trump threats fall of deaf ears

Despite threatening to destroy North Korea, markets seen unmoved at the risk of war, with the nuclear disarmament tactics of old on the table once more.

• Dow hits yet another record high
• Mixed risk picture, as both risky and haven markets rise
• Trump calls out ‘Rocket Man’ at the UN

The optimistic tone seen throughout US markets looks set to continue today, with early trade seeing the Dow hit its 41st record high of the year so far. Despite the optimism evident throughout European and US markets, much of the day has seen a clear degree of hesitancy. With gains across havens such as gold and the yen, there is clearly an incomplete picture of risk sentiment today.

Donald addressed his UN appearance to address the existence and support of ‘rogue regimes’, including the likes of North Korea, Iran, Cuba, and Venezuela. However, for the markets perspective, the focus is clearly on the potential repercussions from Pyongyang following Trump’s declaration that US would be willing to ‘totally destroy’ North Korea. The subsequent risk-on move for gold and the yen highlights that there was little to make markets believe a military response is anywhere near. While Trump’s speech was strongly-worded, the fact is that this represents a redirection of Trump’s effects, away from military and in favour of democratic and political means. Talk of a nuclear disarmament by North Korea is frankly wishful thinking, taking us back to the same rhetoric unsuccessfully espoused by Trump’s predecessors.