World stocks appreciated on Wednesday, August 30, after the United States’ measured response to North Korea’s missile test soothed jittery investors who turned their focus to positive economic data.
European stocks rose higher, tracking counterparts in Asia and the United States and reversing losses from the day before when investors were spooked by Pyongyang’s firing of a ballistic missile over Japan.
Fears that this could trigger an aggressive response receded on Wednesday after the United Nations – in a statement drafted by the United States – condemned North Korea’s latest missile launch but held back any threat of new sanctions.
Trump, who has vowed not to let North Korea develop nuclear missiles that can hit the mainland United States, said the world had received North Korea’s latest message “loud and clear”.
“Instead of the (U.S.) President responding to the escalation via Twitter, as has happened on many recent occasions, the White House issued an official statement to condemn the action,” said IronFX analyst Charalambos Pissouros.
“This may have been interpreted by investors as a sign that the US will approach the situation in a more measured and diplomatic manner, as opposed to raining down ’fire and fury’,” he said.
He was referring to U.S. President Donald Trump’s remarks earlier this month that he said he would respond with “fire and fury” if North Korea persisted in threatening his country.
North Korean media reports on the launch also lacked their usual claims of technical advances, indicating the test may not have succeeded as planned.
The dollar recovered from a four-month low, rising 0.2 percent against the Japanese yen .JPY and against a basket of currencies .DXY.
The yield on U.S. 10-year Treasuries US10YT=RR was back up to 2.13 percent, having sunk below 2.10 percent on Tuesday for the first time since the day after the 2016 presidential election.
In Europe, the pan-European STOXX 600 gained 0.6 percent, recovering nearly all the ground lost in the previous session and banking stocks .SX7P – which had led the risk-averse move lower on Tuesday – were up nearly 1 percent.
This followed gains in Asia: MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS advanced 0.6 percent while Japan’s Nikkei .N225 rose 0.7 percent, Reuters reports.
