After President Trump warned North Korea about dire consequences, the powers in Pyongyang were quick to respond back. The issue has created little panic among investors across the world. While most of the investors believe that there is a remote chance of things going out of control, booking profit was on mind of majority of investors. Stock markets have been rising for the last few weeks and Dow Jones Industrial Average has been hitting new all-time high on many occasions. As valuations have overstretched, investors turn cautious about their long positions. Some market analysts consider a small correction healthy for the markets.

Nikkei was down by 1.29 percent while Indian stock market closed 0.68 percent lower. Euro Stoxx 50 index was down by 1.27 percent and CAC 40 lost 1.4 percent as investors turned cautious. After touching all-time high of 22,179 on Tuesday, Dow Jones closed the day in negative. On Wednesday, Dow Jones touched a low of 22,007 but recovery has been witnessed during later part of the trading session.

The issue with North Korea led to small increase in gold prices, considered as safe haven. Among cryptocurrencies, Bitcoin touched high of 3,525 compared to USD on Tuesday before closing at $3,481. Bitcoin was trading 4.8 percent lower on Wednesday at $3,257. The most popular cryptocurrency has jumped nearly 264 percent in terms of valuation in year 2017.

Investors are cautious about rising valuations as well. Majority of companies in the United States have reported strong results and the economic activity has been supporting stocks scale new highs every week. A small correction during August could set the direction for the next movement in the stock markets.