Stocks dropped and were trading firmly lower on after North Korea launched a missile that flew over the northern Japanese island of Hokkaido, The Wall Street Journal reports.
Futures for the Dow Jones Industrial Average -0.53% slumped 125 points, or 0.6%, to 21,666, while those for the S&P 500 index (INDEX: SPX) -0.70% lost 19.20 points, or 0.8%, to 2,424.50. Futures for the Nasdaq-100 index -0.90% were down 57 points, or 1%, at 5,791.
“The missile launch has impacted financial markets, with risk appetite being hit. The main safe haven trades, such as gold, U.S. Treasuries and the yen have all strengthened, whilst the U.S. dollar and equities have been casualties,” said market analyst at Hantec Markets Richard Perry.
As investors favored low-risk assets, gold rose more than 1% to $1,331.60 an ounce, around its highest since September 2016.
It should also be expected that investors will look for other safe havens and the turmoil on the traditional stock market will push the prices of the cryptocurrencies upwards again.
South Korean military officials also confirmed reports of the missile launch and said that it flew for 1,677 miles at a maximum altitude of 341 miles.
North American Aerospace Defense Command, North America's foremost missile-warning system, determined that the missile did not pose a threat to North America.
“This outrageous action of firing a missile over our country is an unprecedented, grave and serious threat that seriously damages peace and security in the region,” Japanese Prime Minister Shinzo Abe said.
Earlier this months Global markets have already been affected by the tensions between the U.S. and North Korea after president Trump's fiery warning to Kim Jong Un.
North Korea will "face fire and fury like the world has never seen”, if it does not stop threatening the United States, said Donald Trump.
The reaction of the financial world was immediate — major European and Asian indexes dropped.
That had shattered the financial world and wiped out nearly $1 trillion from global equity markets.