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The Clash of the Nations

06744 CC Trader Talk V2

The grave mutual threats between the governments of the United States and North Korea, led a selloff in major continental markets in Europe. These Geopolitical tensions splashed cold water on the markets. The FTSE 100 lost 0.59% at the closing, while the German DAX shed 1.12% to finish in the red, with Commerzbank and Deutsche Bank the worst performers. In France, the CAC 40 dropped 1.40% with Vivendi and Schneider Electric leading the losses. The U.S market followed suit, also in the negative territory with markets increasingly worried about the rising tensions between the nuclear-armed nations.

On the Currency side, the US Dollar dropped against the Swiss Franc today, with safe haven assets pushing upwards, following the verbal clash between North Korea and U.S President Donald Trump. The movement to the classic assets perceived as safe pushes their prices upwards. In fact, this has also affected the Japanese Yen and Gold prices, which jumped after Donald Trump stated that he will unleash “fire and fury” if the Pyongyang continues to threaten the US, followed by the North Korean Leader Kim Jong-un’s explicit threat to strike a U.S. military base in Guam.

Walt Disney and Netflix

Walt Disney will launch two Netflix like streaming services – one for sports and another one for films and television shows. This stand-alone subscription services would appeal to younger audiences who are turning away from traditional media and flocking to Netflix and other digital platforms. This will end Walt Disney distribution agreement with Netflix for new releases.

However, markets are not too keen on the move, with Walt Disney shares in the red following doubts whether it can successfully succeed in launching their own streaming services, rather than rely on Netflix to reach online customers. Walt Disney shares dropped around 3.5% with Netflix also in the red shedding around 1.5%. As a blue-chip component in the Dow Jones index, Walt Disney was the biggest drag on the index average.

Oily Corner

On a positive note, oil prices traded slightly in the green after the Energy Information Administration reported a better than expected fall in the US crude inventories. However, gains were somewhat offset by the reported rise in the gasoline stockpiles. Meanwhile, markets remain skeptical of the OPEC and other major oil producers on the output cut deal, after July supply level was at the record high. The output cut deal was extended in May this year until March 2018.

The Calamatta Cuschieri Traders Blog is available daily on CC WebTrader. Other market coverage including coverage of the International Bond Markets is also available.

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