Geopolitical Problems Scare Wall Street Investors

It’s been another interesting morning on Wall Street as fears over relations with an Asian country presented themselves in a sell-off. No, not China this time — North Korea. This morning President Trump announced he was calling off a planned summit with North Korean leader Kim Jong Un, citing “tremendous anger and open hostility” in some of the statements coming out of the hermit country in recent days (including calling Vice President Mike Pence a “political dummy”).  Following that news, the Dow Jones Industrial Average fell 250 points. As CNN Money notes, the S&P 500 and Nasdaq also shed 1% each today before rebounding some.

This spat with North Korea is the latest in a series of geopolitical issues that, as Janney Capital strategist Mark Luschini put it, have “suffocated” the market despite several strong earnings reports from various companies. Most notably this includes fears that the United States was nearing a trade war with China. While those worries have calmed some in recent days, it must be noted that China is a huge factor in U.S.’s relationship with North Korea. To that point, President Trump has even suggested that Chinese president President Xi Jinping may have had a hand in Kim Jong Un’s change in tone.

Outside of China, there are also talks of other tariffs this morning — specifically auto tariffs. That’s because Commerce Secretary Wilbur Ross announced this week that his department was launching an investigation into whether foreign auto imports posed a threat to U.S. national security. Predictably this news caused foreign automakers like Toyota and Honda to fall a few points while domestics like General Motors and Ford gained slightly.

Speaking on recent tariffs threats, Horizon Investments chief global strategist Greg Valliere told CNN Money, “It’s extremely ill-advised by the Trump administration.” He went on to note the effect various headlines have had on the stock market, saying, “We seem to roll from one news cycle to the next, whether it’s trade, North Korea or Iran.” Speaking of Iran, while the market did take a bit of a hit after the President announced he was pulling out of the Iran nuclear deal, it also rebounded later in the day.

While some of President Trump’s fiscal policies like the Republican-backed tax cuts have goosed the markets in recent month, the consistent threat of tariffs coupled with geopolitical relationship troubles continue to bring volatility to stocks. Although some news items like the death of the Iran deal can easily be shrugged off by the market, it can be hard to predict which headlines will cause lasting sell-offs. So will tensions with North Korea eventually pull prices back down once again? We’ll have to wait and see.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Marqeta Expands Credit Program with New APIs and More

A FinTech that specializes in creating credit card experiences is rolling out some new features. This week, Marqeta announced what it calls a "significant expansion" of its credit platform. This includes more than 40 new credit APIs that will further help clients craft and launch their own credit card products. Additionally, the company notes an updated intuitive dashboard. Using this platform, businesses can create unique card options that can not...

PayPal Launches Small Business Credit Card with Flat 2% Cashback

The popular platform PayPal is rolling out a new product built specifically for small businesses. Today, the FinTech announced the launch of The PayPal Business Cashback Mastercard. The new card will be issued by WebBank and marks the first time PayPal has offered a business credit card. With the PayPal Business Cashback card, business owners will be able to earn 2% cashback on all purchases. This earning rate is not...

Wells Fargo Unveils New Autograph Rewards Visa Card

A new rewards credit card is on the way from Wells Fargo. Today, the bank introduced its Autograph card, which expands the company's refreshed card portfolio. In terms of rewards, the Wells Fargo Autograph Card will earn 3 points per dollar spent in a number of categories. These include restaurants, travel and transit, gas stations, select streaming services, and phone plans. All other purchases will earn 1x points. Beyond the...