Market Index Watch: Responses to North Korea’s Missile Launches

One of the hottest topics in the news this year is the North Korea’s ascension towards first-strike capability in an ongoing political conflict with the U.S. Not only has the Democratic People’s Republic of Korea (DPRK) demonstrated the ability to develop and successfully launch a portfolio of various long ranged weapons, but it has also showed a direct intent to use them if provoked. What hasn’t helped the global political scene are the rather inadvertent remarks issued by the U.S.’s newly elected president, Donald J. Trump. September has seen the president take shots at the Kim Jong-un, DPRK supreme leader, over Twitter.

Nuclear missile tests and displays of power have become a staple of 2017. Each successful nuclear launch warrants dozens of articles pertaining to an impending “World War III”, as well as market instability across most major indices. However, despite the global drama – the Dow Jones industrial average, S&P 500, and NASDAQ all closed out the week with record highs. Many investors are now exhibiting bullish sentiments towards investing in U.S. stocks and consider that the economy might finally be done with focusing on hurricanes, and Trump’s Twitter feed. Alas – the short term gains might still be squandered by the ongoing North Korea missile crisis.

Failed attempts highlighted in grey.

Despite this week’s high closing in the US market, many investors still found themselves in the red intraday as many stocks had plummeted due to this week’s “rocket man” incident. The table above compares five major stock indices in their response to North Korea’s political actions. Firstly, it is important to note that most of North Korea’s tests are conducted on weekends when most markets are closed, however whenever the nation launches a missile during trading hours the financial markets tend to rattle.

The data is indicative of the market’s general performance. It includes obvious extraneous variables, and is not exact in the predicting of future price movement. It is merely an observable trend that implies the causation, but it is not way 100% attributed to it.

The Nikkei proves to be the most sensitive market to the actions of the DPRK. This isn’t unexpected considering Japan is but-a-mere stone’s throw away from North Korea, and the fact that the missile flight path often crosses Japanese territory.

The DPRK is expected to conduct an additional missile test on October 10th, 2017. Yesterday, several news agencies reported North Korea to be moving more missiles from their development facility. Additionally, the Korean Central News Agency (KCNA), an aggregate of the DPRK’s news media (take that with a grain of salt), reported that more locals have pledged to join Kim Jong-un’s army against the United States and vowed to “wipe out all those wolves from the surface of the Earth.”

 

Get ready for some tumultuous market activity on Tuesday, October 10th, 2017.

 

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