Island Crises Shake Markets
As many U.S. investors took a step back for the Thanksgiving holiday, commodity prices focused on foreign markets this week. Overseas, where Thanksgiving is not celebrated, two unrelated crises took the forefront.
Tuesday, North Korea fired artillery shells at the South Korean island of Yeonpyeong, killing South Korean marines and civilians. The attack led to a firefight between North and South Korean artillery and sparked immediate global response.
North Korea's aggression was condemned by the United Nations and forced tense reactions from the military powers in the region. North Korea borders on Russia and China, while South Korea is only 50 miles from Japan and hosts nearly 30,000 American troops.
Given the strategic significance of the Korean Peninsula, the history of conflict in that region, and the potential threat of a nuclear North Korea, global powers are eager to diffuse the situation. As of Friday, the conflict has not escalated significantly, although troops are on standby, including a U.S. aircraft carrier group.
Ireland's budget problems continue to weigh on investors' thoughts. Despite Ireland's intention to accept a bailout package from the European Union, global investors sold stocks, European bonds and the European currency on fears that the "debt contagion" could spread. This week, the Eurocurrency fell $1.32 (-3.5%), while the Dow Jones
Industrial Average lost over 100 points.
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