Will investors lose appetite for risk during high geopolitical tensions?

U.S stock indexes are trading lower today as investor concerns take hold over escalated rhetoric and military threats between the North Korea and the U.S.. North Korea has warned it is considering a preemptive strike on a U.S. military base on Guam, a U.S territory in the region. This threat was a response to strong remarks from President Donald Trump in which he signalled North Korea would be met with “fire and fury like the world has never seen” if the DPRK continued its typical sabre-rattling. Consequently, geopolitical tensions have rotated back into the forefront of investor thinking. High uncertainty could support investor expectations of a market pullback, which could raise the chances of a flight from risk-assets.

The CBOE Volatility Index (VIX) is up 10%, or 1 point, rising to 12.05. We’re currently seeing gains in gold and government bonds, which are perceived safe-haven assets. Equities, oil futures and emerging markets are down. GOP lawmakers have sought to cool down the rhetoric and lean towards S.O.S Rex Tillerson’s approach- which is diametrically opposed to President Trump’s- to engage in high-level talks and indicate the U.S does not seek to destroy North Korea. Calm should be restored to the markets when the administration can arrive at a coherent, unified position on the situation that does not inflame tensions.

The DJIA is currently down 0.26%, or 57 points, at 22,028. The S&P 500 is currently trading at 2,471- down 0.17% from the open. The Nasdaq-100 is down 0.38% at 6,346.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  overall negative signals. Today’s negative vector figure of -0.17% eases to -0.02% within three trading sessions. Today’s predicted support and resistance is 2,466.55 (± 2.91) and 2,486.12 (± 2.94), respectively. The predicted close today is 2,470.41. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.  

Must-buy Stocks for Thursday

Based on our Stock Forecast Toolbox’s 10-day prediction data, we’ve found 2 great candidates of interest. They are:

Apple Inc. (AAPL)

Apple Inc is ranking high in our short-term confidence ratings, and is showing incrementally building positive vector signals across the 10-day forecast..  

Our 10-day prediction model shows incrementally building positive signals. The stock is currently trading at $160.37, up 0.34% from the open with a +0.81% vector figure for today. Tomorrow’s prediction shows an open price of $160.84, a low of $160.18 and a high of $164.26. The predicted close for tomorrow is $163.03. Vector figures show +1.49% for tomorrow. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.   

Vale S.A. (VALE)

Vale S.A., a Brazilian mining giant, is showing high bullish momentum in our Stock Forecast Toolbox’s short-term predictions

Our 10-day prediction model shows incrementally-building positive signals. The stock is currently trading at $10.09, which is down 1.08% from the open. Tomorrow’s prediction shows an open price of $10.12, a low of $10.10 and a high of $10.59. The predicted close for tomorrow is $10.52. Vector figures show +1.40% for tomorrow and progresses to +3.84% in two more trading sessions. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.   

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Oil

Crude oil prices are seeing mostly flat trading today following an inventories report from the Energy Information Administration today. For the week of August 4, U.S crude supplies pulled back by 6.5 million barrels to 1.15 billion barrels, although gasoline supplies grew. The American Petroleum Institute showed similar figures. Although waning crude inventories would boost per-barrel prices, a hike in gasoline supplies have off-set that. Geopolitical tensions around North Korea have also impacted prices, as the markets see a risk-off move into haven assets. West Texas Intermediate for September delivery is currently priced at $49.18 per barrel, up 0.08% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows overall negative signals. The fund is currently trading at $10.09, which is down 0.25% from the open. Today’s prediction sees support at $10.01 (± 0.05) and resistance at $10.16 (± 0.06). The predicted close for today is $10.01. Vector figures show -0.02% for today, moving to -0.44% in three sessions. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.   

Gold

The price for December gold is currently up 1.24% at $1,278.60 a troy ounce. After a U.S military base on Guam was threatened by a missile strike from North Korea and U.S sabre-rattling from the White House has increased, investors are reacting. Gold prices hit $1,270 overnight and have climbed from there today as market participants turn to perceived safe-haven assets.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows consistent negative signals. The gold proxy is currently trading at $121.07, up 1.01%. Today’s predicted low is $118.48 (± 0.23) and the predicted high is $119.86 (± 0.24). The predicted close today is $119.13. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.   

Treasuries

Another perceived safe-haven, government bonds, drew investor interest during high geopolitical tensions. A threat of a missile strike against a U.S military base on Guam has become one of North Korea’s most realistic warnings, considering recent reports that the regime has built a miniature nuclear warhead. This, in turn, has pushed yields down as the two tend to move inversely to one another. The yield on the 10-year Treasury note is currently down 1.22% at 2.23%.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see consistent positive signals in our 10-day prediction window. Today’s vector of +0.03% moves to +0.44% within three trading sessions.  The ETF is currently priced at $125.42- up 0.64% from the open. The predicted close today is $124.51 with a low and high of $124.33 (± 0.30) and $125.33 (± 0.30), respectively.  Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.

Volatility

The CBOE Volatility Index (VIX) is currently up 8.21% at 11.86, and our 10-day prediction window shows overall negative signals. The predicted close today is 11.96 with a positive vector of +0.03%. Today’s predicted lows and highs are 10.88 (± 0.20) and 12.51 (± 0.23), respectively. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.

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