The Dow, Nasdaq, and S&P 500 all opened higher today despite Pyongyang firing a second missile over Japan.
Could it be that the markets are becoming desensitized as it should be expected that there’s no way North Korea will end its missile program regardless of the severity of new sanctions?
The sentiment currently remains mixed especially in the US as traders weigh in on the potential for another rate hike later this year given the inflation data we’ve seen.
Looking over at the USDJPY pair, the dollar strength is overshadowing the safe haven yen as traders place greater emphasis on the Federal Reserve’s rate hike decision over safe haven assets.
Currently, the yen is testing lower bound range (upper bound for USDJPY). We can also see that gold is trading lower despite typically making an uptick in situations like these.
The overlapping bars over the past few days do signal a range on a lower timeframe, but the current bar remains bearish indicating that selling did take place through the news of the missile launch event.
However, I wouldn’t say this is sufficient to conclude that the market isn’t accounting for the risks of North Korea. Defense products and services post gains despite a very mixed picture on Finviz’s heatmap of the overall market.
As you can see, Lockheed Martin gaps up on the open after yesterday’s double bottom indication. Currently up at +0.4%, it’s definitely bound to move higher. This isn’t just the case with LMT, but the whole industry as well.
I sorted the top ten defense products and services companies by market cap, most have gained since the open today as well.
I would be curious to see further market reactions to North Korea’s missile testing activities especially as the US continues to urge world super powers China and Russia to intervene before this gets out of hand.