It’s not surprising that the major U.S. stock indexes are down today. So far today the North Korean foreign minister has said that President Donald Trump’s threats against his country amount to a declaration of war, and that North Korea has the right to shoot down U.S. warplanes even if they aren’t actually flying in North Korean airspace.
Kind of amazing then that the Standard & Poor’s 500 stock index was off only 0.38% as of 3 p.m.New York time.
Other measures of market nervousness were also up today but also modestly. Gold moved 1.16% higher as of 3 p.m. to $1312.60 an ounce. The CBOE S&P 500 Volatility Index (VIX) was up 12.20% to 10.76. That ‘s still an extraordinarily low reading on this index. And the VIX, as of 3 p.m., was actually lower than the 11.21 it had registered earlier in the day.
To me it looks like the general market reaction has been tempered, for today at least, by a sharp rotation out of big name technology stocks. And by a substantial rally in oil with the international Brent benchmark hitting a two-year high at $59.04 a barrel, up 3.83%, and the U.S. benchmark West Texas Intermediate climbing 2.94% to $52.15 a barrel. The oil rally comes as Turkey threatens to cut off oil exports from the Iraq’s Kurdistan as the Kurds hold a vote on independence. (Turkey is home to a substantial Kurdish population that favors the creation of an independent Kurdish state.)
Selling into that technology retreat and buying into the oil rally are likely to be front-of-the-mind responses to general market risk that don’t carry the uncertainty of trying to guess what North Korea or the United States will say or do next.