LONDON: European
stock markets opened lower on Wednesday after fresh hostilities
erupted between India and Pakistan, causing Asian assets to fall and
pushing investors into safe havens such as the yen.
After about
an hour of trading, the pan-European STOXX 600 was down about 0.5%.
All the main regional indexes were in the red. US stock futures for
the S&P 500 were down 0.1%.
Earlier,
Pakistan said it had carried out air strikes in Indian-occupied
Kashmir and shot down two Indian jets in its own airspace.
Indian and
Pakistan bonds and currencies fell and MSCI’s broadest index of
Asia-Pacific shares outside Japan was last down 0.15% as the threat
of conflict between the nuclear-armed neighbors grew.
“This
adds another layer of risks for investors”, said Charles St-Arnaud,
a strategist at Lombard Odier, although he noted the market moves
remained limited for now.
Markets
were watching the US-North Korean summit, which begins in Hanoi later
on Wednesday. US President Donald Trump will meet North Korean leader
Kim Jong Un for their second summit, with the United States pushing
North Korea to dismantle its nuclear weapons program.
The
heightened geopolitical risks helped assets considered safer than
stocks, such as the Japanese yen, which gained against the dollar.
The dollar
itself hovered around a three-week lows after Federal Reserve
Chairman Jerome Powell reiterated on Tuesday the Fed had shifted to a
more “patient” policy approach regarding changes to interest
rates.
“We
didn’t learn much new,” St-Arnaud said. The new dovish stance of
US monetary policy had not weakened the dollar much, notably against
the euro.
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