Stock Market News (US Open) – European markets finish day in the red; US closed for Labor Day – XM (blog)

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Andreas Georgiou, XM Investment Research Desk

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European markets remained in negative territory on rekindled tensions in the Korean peninsula after North Korea proceeded with a nuclear test during the weekend. US markets are closed today for Labor Day on a day when futures on major Wall Street indices are recording losses.

During afternoon European trading hours, the UK’s FTSE 100 and the French CAC 40 were down by 0.3%, while the German DAX was down by 0.2%. At the same time, the pan-European Stoxx 600 and the blue-chip Stoxx 50 were both down by a bit less than 0.5%.

Excluding energy, not a single sector within the Stoxx 600 was on the rise with the worst performing stocks being Gemalto and Melrose Industries. Gemalto, the Dutch software company that specializes in digital security, was last down by 7.2%. It was hurt after it saw its price target being cut by Deutsche Bank as well as broker Kepler Cheuvreux. Meanwhile, Melrose Industries, the UK mid-cap heavy machinery & vehicles firm, traded 5.2% down on the day. The company’s stock price has declined considerably in recent days with the latest blow coming after poor results from the firm’s generator division during late August disappointed investors.

On the upside, the Stoxx 600’s best performing stock was UK specialty chemicals firm Victrex, another UK mid-cap stock. Among others, the company today lowered its full year tax guidance. Credit Suisse also raised its target price for the company, expecting it to outperform. The company gains last marginally exceeded 8%.

Miners and FTSE 100 constituents Fresnillo and Randgold Resources remained in the green, with the former adding to morning gains to stand 2.2% higher on the day and top the list of FTSE best performing stocks. The latter was 1.6% up. The two firms benefitted from the rise in gold. The precious metal’s safe haven allure allowed it to rise to an 11-month high of $1,339.47 an ounce during today’s trading and was last trading up by 0.8%, not far below the $1,335 handle. Industrial metals, including copper, rose today as well.

Futures on the Dow, S&P 500 and Nasdaq 100 were all last down by 0.3%.

Despite today’s fall, one cannot avoid drawing parallels to last week when Pyongyang launched a missile that flew over Japan in an act of defiance to joint military drills involving US and South Korean troops. Back then, stock market declines were short-lived with market participants flocking to equities not long after the incident. It would be interesting to see whether this week’s reaction will be similar or if the various players involved will keep tensions heightened.

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