European stock markets dropped across the board Monday, with so-called risk assets rattled after North Korea conducted a nuclear bomb test and was said to be preparing for a possible launch of another intercontinental ballistic missile.
The Stoxx Europe 600 index SXXP, -0.52% fell 0.5% to close at 374.20, snapping a three-session winning streak.
The decline in stocks came after North Korea on Sunday conducted its sixth and most powerful nuclear test. On Monday, media reports from South Korea said Pyongyang appeared to be making preparations for the possible launch of another long-range ballistic missile.
“Another week, another provocation, as North Korea re-emerges as the key driver of market sentiment,” said IG market analyst Josh Mahony in a note. “Unfortunately, there is unlikely to be any end in sight for this current standoff with North Korea, with few options seemingly on the table to demilitarize the regime.”
The U.N. Security Council will hold an emergency meeting on Monday. U.S. Defense Secretary James Mattis on Sunday warned North Korea that any attack on the U.S. or its allies would be met with a massive military response.
“One thing is for sure, with North Korea testing increasingly threatening weapons, the growing threat of a nuclear war is going to continue bolstering gold prices, which today hit an almost one-year high,” said Mahony.
Considered a haven at times of geopolitical stress, gold GCZ7, +0.68% leapt 0.8% to $1,340.50 an ounce and briefly hit $1,343.50, around its highest since early September 2016. That supported gains for gold miners on the Stoxx 600. Shares of Polymetal International PLC POLY, +3.70% bounced up 3.7%, Centamin PLCCEY, +2.39% rose 2.4% and Randgold Resources Ltd. RRS, +2.02% GOLD, +0.37% picked up 2%.
South Korea’s Kospi Index SEU, -1.19% closed down by 1.2%, but managed to finish off session lows.
The euro EURUSD, +0.3203% rose to $1.1917 from $1.1863 late Friday in New York. The DXY, -0.10% fell against major rivals, including the Swiss francUSDCHF, -0.7048% and the Japanese yen USDJPY, -0.57% considered haven plays.
European Central Bank will be in focus as it’s set to release its latest policy decision on Thursday. There’s been speculation that the ECB may discuss when what will happen with its bond-buying program of €60 billion a month, which is currently scheduled to run through December.
Stock movers: Novartis AG NOVN, -0.99% NVS, -0.57% fell 1% after the Swiss pharmaceutical company said its Chief Executive Joe Jimenez will step down in January after leading company for eight years.
Indexes: Germany’s DAX 30 index DAX, -0.33% fell 0.3% to 12,102.21 and France’s CAC 30 index PX1, -0.38% gave up 0.4% at 5,103.97. Spain’s IBEX 35 IBEX, -0.80%fell 0.8% to 10,243.20.
In London, the FTSE 100 UKX, -0.36% ended down 0.4% at 7,411.47.