The benchmark averages are all trading measurably lower at midday on Tuesday as geopolitical tensions are rekindled by escalating tensions between Washington and Pyongyang and soft U.S. factory orders. Led by losses in the banking sector and component stock United Technologies (UTX), the Dow is negative for the first time in five days.
Futures were already defensive in the wake of another provocative missile launch in North Korea with losses accelerating after President Trump tweeted that the government will allow South Korea and Japan to “substantially” increase its purchases of U.S. military equipment.
Risk aversion is evident in the performance of safe havens on Tuesday with gold reaching its highest level in nearly a year, and the yield on the 10-year benchmark Treasury note down more than 8 basis points to a 2.072% yield.
A 3.3% drop in August factory orders roiled the banking sector as the trajectory of U.S. interest rates is recalibrated by sluggish production data and increased geopolitical risks. Citing the persistently low rate of inflation, Fed governor Lael Brainard suggested that normalizing monetary policy should be reconsidered.
European equities were mixed with the UK’s FTSE-100 undermined by a sizable rise in sterling and most euro-zone bourses lower in sympathy with their U.S. counterparts, surrendering early gains tied to upbeat Chinese services-sector data. Germany’s DAX held onto a modest gain thanks to better-than-expected German services-sector PMI.
In corporate news, United Technologies said it has agreed to acquire Rockwell Collins (COL) for $30 billion, or $140 per share, creating one of the world’s largest civilian and defense aircraft component makers. Additionally, tronc (TRNC) bought The New York Daily News for an undisclosed amount, expanding its publishing portfolio to 10 major U.S. markets.
Crude oil was up $1.45 to $48.75 per barrel. Natural gas was down $0.094 to $2.97 per 1 million BTU. Gold was up $12.10 to $1.342.40 an ounce, while silver was up $0.16 to $17.98 an ounce. Copper was up $0.011 to $3.13 per pound.
Among energy ETFs, the United States Oil Fund was up 2.79% to $9.94 with the United States Natural Gas Fund was down 2.87% to $6.56. Amongst precious-metal funds, the Market Vectors Gold Miners ETF was up 1.23% to 25.09 while SPDR Gold Shares were up 0.89% to $127.18. The iShares Silver Trust was up 1.08% to $16.91.