Tensions between North Korea and the United States could not really be any higher. It has been the macro-political wild card waiting in the antechamber to the stock market optimism suite both before and since Donald Trump got elected in America, and it is at flashpoint. Asian markets fell on Good Friday as professional investors and sideline stock punters alike worried about the financial, business and economic fallout if the military confrontation becomes a shooting war. We may be close to finding out. • READ MORE: UK ‘concerned’ at new North Korea missile test amid growing tension My thought is that any outbreak of outright hostilities would see a sizeable sell-off of equities in the immediate aftermath. Its scale would depend on the extent of the force used on both sides and the ensuing unpredictability. We might see mid-to-high single digits falls in key stock market indices worldwide, with Asian equities’ worst hit as they are at the centre of events of potential enormity. Korea is a climacteric for our times. The possibility of an investor flight to the historical havens of gold, bonds and property if higher-yielding but riskier equities take a pounding on the back of military strikes rather than military manoeuvres cannot be ruled out. I wrote in The Scotsman in January: “One wonders whether the stock market lives in a hermetically sealed room away from reality, enveloped in its internalised conflict between greed and fear.” I was reflecting on the relative equilibrium of shares and stocks since the shock Brexit vote last summer and tweet-pyrotechnics Trump’s surprise election as president last autumn. 200 Voices: find out more about the people who have shaped Scotland At that time, and things have not changed immensely, markets had seemed to have simply bought into the new president’s pledge of slashed US corporation tax and a bonanza of spending on the country’s creaking infrastructure that would be a tide lifting all boats. Good for company earnings, both domestic and international, and good for stock markets. We didn’t quite expect the boats might actually be submarines, however. Not this early in the Trump stewardship. Most of us can be forgiven nervousness in the current situation. Share prices seem the last thing to be concerned about when global stability seems at stake. This is the nearest thing I can think of to the Cuban missile crisis in 1962. The difference then was that the world knew the Russians had real nuclear weapons, we are not sure whether Kim Jong-un has the real deal or more often ones that implode. However, even a regional, non-nuclear exchange would be a disaster. But even massive uncertainty often ushers in market contra-thinkers and steel nerves. The contrarians look beyond stormy waters to see buying opportunities when there is literal or metaphorical blood in the streets. On a two-to-five year timeframe, some of these souls might think if there was a big selloff of equities it would be a great opportunity to cash in, acquiring holdings in fundamentally good companies at knockdown prices in a fleeting drama. Let’s hope it is. Shops feel the chill Retail sales is the only main UK economic indicator this week, and it is likely to pour some cold water on the economy’s perceived resilience rather than a douche that serves as a reality check. Sales volumes are seen as having fallen up to 0.5 per cent in March, which would be down 1.1 per cent in the first three months of this year. • READ MORE: Rising inflation and muted wages hit the high street Nothing like a collapse, but it would still give a chilly feel. The consumer has been the key driver of the economy since the financial crash. Exports are relatively pale (though helped by post-Brexit vote sterling weakness), manufacturing is plodding. Business investment isn’t bad, but has been hamstrung by the uncertainties of quitting the EU. And this Friday’s high street figures are likely to show households are now feeling the pinch, caught between the rock of rising inflation and the hard place of muted wage growth as businesses continue to weigh the EU unknowns. The retail pressures look unlikely to subside. A report from independent economics consultancy Cebr out today predicts that the typical UK household will be £500 worse off this year than in 2016. That would make 2017 the first year of falling real earnings since 2013. Cebr expects inflation to run at about 2.7 per cent this year, ahead of earnings growth of 2.2 per cent. Nothing portentous, but still unwelcome. Click here to ‘Like’ The Scotsman Business on Facebook