Will 'fire burn and cauldron bubble' for equities?

IT could be the same old, same old this week. Even as many hesitate to read too much into US President Donald Trump's undiplomatic rhetoric, traders could still find themselves losing sleep over the rising rift triggered by his recent "fire and fury" threat to North Korea over the latter's nuclear programme.

That could turn the flight to safety (think gold and the Japanese yen) back in vogue, not unlike what happened last week. "Tensions over North Korea lend support to safe-haven assets, particularly gold. Geopolitics is a binary wild card that usually provides only a temporary boost to safe-haven assets. We believe the recent recovery should run out of steam once the US dollar regains strength," said Norbert Rücker, Julius Baer head of macro and commodity research.

Equities could continue to suffer a hit amid the risk-off mode. US stocks finished higher last Friday, clawing back from sharp losses in the previous session, but the sense of caution was palpable over the war of words between the US and North Korea, the Dow and S&P 500 having suffered their worst weekly showing since March.