Global markets jolted by Trump's fiery warning to North Korea

Global markets jolted by Trump's fiery warning to North Korea
US President Donald Trump's vow to unleash 'fire and fury' on North Korea if it continued to threaten the United States sent global stock markets lower on Wednesday.

Britain’s FTSE100, Germany’s DAX, French CAC and other stocks in Europe dropped more than a percent, following falls in Asia and on Wall Street.

Tokyo's Nikkei 225 share index fell 1.3 percent to its lowest since June 1, while South Korea's KOSPI index plunged 1.1 percent to seven-week lows.

US stock index futures are down, with the S&P 500 predicted to open 0.4 percent lower on Wednesday.

"Trump's comments about North Korea have created nervousness, and the fear is if the President really means what he said: 'fire and fury,'" said Naeem Aslam, chief market analyst at Think Markets in London, as quoted by Reuters.

While financial markets have become accustomed to aggressive rhetoric from Pyongyang, Washington has traditionally taken a more diplomatic approach. The tone of Trump's warning this time around has shaken investors.

“North Korea best not make any more threats to the United States,” Trump told reporters on Tuesday. “They will be met with fire, fury and, frankly, power the likes of which this world has never seen before.”

The Norwegian stock market briefly bucked the trend, but soon followed other European markets into the red. It has been dubbed as the 'warmongering' market by some analysts, who have noticed a pattern of rising stocks following previous North Korea tensions.

"The typical text book trade is that investors rush for safe havens," said Aslam.

As usual, after news of political instability, investors propped up gold prices. Gold has risen almost a percent, trading at $1,273.9 per troy ounce.

"Heightened geopolitical risks overnight have seen the markets flip from risk-on to risk-off and we have to wait and see how long this move runs before adding some positions," said Viraj Patel, an FX strategist at ING in London.