What's going on?

North Korea launched a missile that flew over Japan on Tuesday morning and markets are reacting across the board (tweet this), from stocks and bonds to commodities, like gold.

What does this mean?

In the last couple of months, North Korea has conducted missile tests, has had UN sanctions imposed on it and has engaged in nuclear sabre-rattling with the US. Tuesday�s launch was just the latest in a series of events. Given the complicated geopolitics of the region, fears of a conflict involving major economies like Japan, South Korea and the US have increased. These fears bring uncertainty to financial markets as they carry potential implications for economic growth � conflict (even non-nuclear), although seemingly unlikely, could harm business activity in those economies (and elsewhere).

Why should I care?

For markets: Investors moved out of stocks and into government bonds and gold, following the news.

Firstly, the uncertainty has been bad for stocks. Investors generally don�t like geopolitical risks as outcomes are difficult to predict and have the potential to disrupt the normal state of global business (which would likely hurt companies� profits). Secondly, perceived �safe haven� investments did well on Tuesday. Government bonds of developed economies, like the US, Japan and Switzerland, and gold are considered relatively �safe�. This is largely because investors expect these governments to be able to pay back their debts regardless, and because gold has, for centuries, been viewed as a safe store of value.

The bigger picture: There is plenty of uncertainty for investors to deal with at the moment.

In addition to geopolitical tensions, there are other factors bringing increased uncertainty for investors. Hurricane Harvey and its potential effect on the US economy, potential ruptures in international trade agreements and political turmoil in Washington (including brinkmanship in the debt ceiling negotiations) are all factors that are weighing on investors� minds as the summer nears an end.