Europe turns red: Markets react to escalating tensions between the US and North Korea

LONDON — Investors are dumping US and Asian stocks and currencies on Wednesday amid escalating tensions between the United States and North Korea.

 European equity markets also opened sharply lower and measures of volatility spiked. 

 President Donald Trump promised "fire and fury and frankly power, the likes of which this world has never seen before" on Tuesday evening in response to recent threats from North Korea and its leader Kim Jong Un.

 Hours later, North Korea responded by saying it is seriously considering a missile strike on the Pacific island of Guam, home to a US military base.

 Here's how financial markets have reacted:

 South Korean stocks, currency down: South Korea's leading shares index, the Kospi, closed down 1.3% on Wednesday, taking a sharp leg lower after the escalation of tensions. The Korean won is also suffering — the US dollar is up 0.58% against the currency at the time of writing (7.30 a.m. GMT/1.30 a.m. ET), while the pound is up 0.77% against the won, and the euro is up 0.53% against it.

Wider Asian markets down: Japan's Nikkei stock index closed down 1.33%, the Hong Kong Hang Seng index is down 0.35%, and China's Shanghai Composite is down 0.28%.

US dollar, stocks slip: The dollar is weak against the pound and the yen. The dollar is down 0.21% against sterling at the time of writing and down 0.27% against the Japanese yen. S&P 500 futures are down 0.24%, Nasdaq futures are down 0.27%, and Dow 30 futures are down 0.15%.

Gold and silver rise: The price of gold is up 0.30% to $1,265.28. Silver is up 0.51% to $16.55. Both precious metals are popular risk-off trades, with investors turning to them in times of uncertainty.

Volatility jumps: The VIX index, which measures volatility and is often nicknamed the "fear index", jumped 10% in the wake of Trump and Jong Un's comments.

European markets drop: The UK's FTSE 100 has opened down 0.60% on Wednesday morning. Elsewhere, the German Dax has opened down 0.80%, France's CAC40 index is down 0.87%, and the Euro Stoxx 50 is down 0.81%.


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