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Cautious Global Markets

  • Junior Trader
  • Blog post submitted on 11th August 2017
06744 CC Trader Talk V2

U.S. stocks fell the most in six weeks on Thursday and the CBOE Volatility Index reached its highest since May as American allies warned North Korea against firing missiles toward Guam. Safe haven assets such as gold and treasuries have meanwhile posted gains as investors seek low-risk alternatives until they see geopolitical tensions easing. Oil pulled back despite OPEC reports showing increased production from the group’s members.

European stocks also fell, led by American/North Korean rhetoric and losses in Industrials. German consumer-goods company Henkel AG & Co. was among the companies whose shares pulled the market toward a second consecutive decline with the Stoxx Europe 600 index falling 1% to 376.05. Germany’s DAX 30 lost 1.2% to 12,014.30 and France’s CAC 40 fell 0.6% to 5,115.25

Gold to the rescue

Gold prices traded at their highest level in more than two months Thursday, adding to the previous session’s sharpest daily rise since the middle of May. Gold futures rose 0.9% to $1,290.90 an ounce however remained below the $1,300.00 mark most analysts are watching. Silver also gained 1.3% to $17.085 an ounce, reaching territory last seen roughly two months ago.

Risk aversion once again becomes the name of the game as investors head for cover in the traditional safe havens amidst mounting geopolitical tensions. Uncertainty persisted after a North Korean army commander said “sound dialogue is not possible” with U.S. President Donald Trump and “only absolute force can work on him,”

VW & Tata end cooperation talks

Cooperation talks between Germany’s Volkswagen Group and India’s Tata Motors about joint development of a car for emerging markets have ended amicably, the two companies said on Thursday. Volkswagen’s efforts to develop a cheap vehicle platform for Asian markets was dealt a further blow by the collapse of the talks after an earlier alliance with Suzuki Motor Corp also fell apart.

Volkswagen commissioned the German group’s Skoda to lead the talks with Tata and explore a possible entry-level car platform together with the Indian manufacturer, using Tata’s AMP vehicle platform as a basis. Skoda dropped the idea of developing the AMP platform on fears that it would need significant further investment to meet stringent crash-test and emissions requirements, instead exploring VW’s platforms for further cost savings.

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