While we await Donald Trump's response to the second consecutive North Korean provocation in four days, both on twitter and elsewhere, South Korean President Moon Jae-in has already ordered his troops to demonstrate their capability for "strong retaliation" and put on a show of "overwhelming force", after his office convened a National Security Council session.
Global markets are stuck in a holding pattern with S&P futures up modestly after fluctuating overnight, as European and Asian shares rise with oil while the dollar has dipped lower ahead of the biggest central bank event of the year: the Fed's Jackson Hole symposium where Janet Yellen and Mario Draghi will speak at 10am and 3pm ET, respectively. Meanwhile, world stocks drifted toward their best week in six on Friday, as a near three-year high in emerging markets shares and a roaring rally in industrial metals bolstered the year’s global bull run.
The billionaire Samsung Electronics Vice Chairman and heir, Lee Jae-yong, was sentenced to five years in prison for paying bribes worth 8.9 billion won ($7.9 million) to a friend of then-president Park Geun-hye to win her support for the merger of two Samsung affiliates. The sentence marks a "watershed moment" for the country’s decades-long economic order dominated by powerful, family-run conglomerates.
Lee Jae-yong, Samsung Group heir arrives at Seoul Central District Court to hear the bribery scandal verdict on August 25, 2017
The global risk-off mood accelerated overnight on Trump "stability concerns", coupled with fallout from the Spain terrorist attack and lingering North Korea tensions, even if the VIX is off its latest highs, trading just above 15. Investors fled into German and U.S. Treasury bonds and bought gold for the third day in a row, as the appeal of such top-notch assets grew further due to a deadly attack that killed at least 13 people in Barcelona.
The global rout resulting from tensions over the North Korean nuclear standoff continued on Friday as world stocks tumbled for the fourth day, on course for their worst week since November following a third day of escalating verbal exchanges between Trump and Kim, as European and Asian shares tumlbed, volatility spiked, and the selloff in US futures continued albeit at a more modest pace as the escalating war of words over North Korea drove investors on Friday to safe havens such as the yen, Swiss franc and gold.