Escalating tensions between Washington and Pyongyang spooked investors into surging demand for safety, sending gold and the Japanese yen higher.

Risk-averse sentiment is dominating global equities markets, and US indices have retraced from record levels over the last two days. Although it is considered highly unlikely that this tension will escalate into a nuclear war, the market still needs to see how President Trump will eventually deal with his advocating ‘fire and fury’ against North Korea’s threat.

Geopolitical tension gives investors a good reason to take profits and, at the same time, provides opportunities to those who missed out the earlier bull run to get into the market. A technical correction is probably on its way, but fundamental elements remain intact. As long as the global economy continues to move in the right track and corporates continue to generate higher profits and reward investors, the impact on the markets of geopolitical tension will soon fade away. 

Gold and silver are among the biggest winners, surging 1.5% and 4.2% respectively over the last two days. Technically, the gold price is challenging the key Fibonacci retracement level at US$1,275. Breaking above this level could open the door for more upside towards the next Fibonacci level at US$1,296. For silver, its immediate support and resistance level can be found at US$16.78 and US$17.16 respectively. 

Technical Analysis:

Silver - Cash

  • Broken out above 38.2% Fibonacci extension level of US$16.78
  • 10-Day Simple Moving Average turned bullish (sloped upward)
  • SuperTrend (10,2) remains in bullish set-up (green colour)
  • Immediate support and resistance levels at US$16.78 and US$17.16 respectively

Singapore earnings highlight:

Yangzijiang (Q2):

  • Overall: beat estimates
  • Earnings surged 73% to S$146 million, revenue up 27%
  • Earnings per share (EPS) S$0.19, easily beating forecast of S$0.13
  • Secured 13 new contracts worth US$318 million in the first quarter due to recovery in demand for dry bulk carriers

GLP (Q1):

  • Overall: miss estimates
  • Revenue increased by 27% YOY, but earnings down 29% to US$144 million
  • EPS $0.03, missed estimates of $0.034
  • The company has received a privatisation offer of S$3.38 per share. Shareholders will also be entitled to receive the FY17 dividend of S$0.06, to be paid on 22nd Aug

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.