Australian stocks pared early gains this morning after regional markets wavered as tensions escalated on the Korean peninsula.
At lunchtime the ASX 200 was 4 points or 0.1% stronger on below-average holiday volume at 4767. Energy stocks (+1%) and property trusts (+0.8%) topped sector gains, while financials, utilities and IT stocks were weakest.
"We are certainly starting to see a significant wind down in volume leading up to the Christmas break and we are likely to see that continue as we grind closer to Friday," Macquarie Private Wealth adviser Helen Spencer told Fairfax.
Asian markets retreated after South Korea announced it will proceed with a military exercise in disputed border territory neighbouring North Korea later today. North Korea has threatened to retaliate if the South goes ahead with the live-fire exercise on Yeonpyeong Island.
South Korea's Kospi index fell 1.3% in early trade. Japan's Nikkei was recently down 0.21%, Shanghai was up 0.07% and Hong Kong's Hang Seng off 0.03%. Dow futures were recently at -1.
Gold rallied strongly as it benefitted from its "safe haven" appeal in times of trouble. Spot gold was recently $8.50 stronger than Friday's close at $1,384 an ounce. Crude oil futures rallied 35 cents or 0.4% to $88.37 a barrel. The dollar was buying 98.95 U.S. cents.
Korea may just offer gold the next catalyst for a move higher. Let's hope the price is not Korean War II. Gulp. Been a good morning here aside from geopolitical turmoil. Caught bounces in ALS, GTE and SXL. Used the rally in MAE to get one of my dogs out of the kennel for a thin profit. (Like Kate, I like to clean the kennels before a new year.)
