North Korea and Trump back in the spotlight ahead of Jackson Hole banking event
In Asia the Nikkei 225 is down around 0.4%, and European markets are forecast to open lower:
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Stock markets are in a cautious mood amid continuing political tensions and ahead of a big week for central bankers.
Europe is set for a slightly negative start on Monday, threatening to extend its losing streak to three sessions as political and geopolitical risk continue to weigh on risk appetite.
Geopolitical risk could rear its ugly head again this week as the US and South Korea begin planned military exercises on Monday, just as tensions between the North and these two countries appear to have calmed. Should North Korea respond in kind, then we could see a repeat of the safe haven rush from a couple of weeks ago when the situation previously flared up between the countries.
We did see a late rebound off the lows late on Friday when it was announced that Steve Bannon, one of President Trump’s closest advisors had left the administration. It was well known that there was tension amongst him and some other members of the President’s top team, including Chief Economic advisor Gary Cohn.
There had been some uncertainty surrounding the future of Cohn, in the wake of recent events in Charlottesville, and the President’s failure to unequivocally condemn the violence of the far right, particularly given Cohn’s own Jewish ancestry.
The scope for surprises was diminished somewhat by ECB sources at the end of last week when it was reported the ECB President Mario Draghi would not be making any comment on monetary policy when he speaks later this week.
This reticence to comment may also have something to do with the fact that there appears to some concern on the governing council about an overshoot to the upside for the euro, particularly given the recent weakness of the US dollar.