One of America's top fund managers has urged investors to maintain "cool heads" as US tensions with North Korea continue to send ripples through global financial markets.
Mellody Hobson, who manages about $15 billion as president of the US funds manager Ariel Investments, said while markets remained cautious, there were so far few signs of volatility seen in previous global crises.
"The futures are negative but not in a dramatic way, and that is telegraphing the fact that markets are predicting that cool heads will prevail."
Ms Hobson said while markets are on edge, investors should remain calm as calls for greater diplomacy and trade sanctions ratchet up.
"Certainly I want to project a feeling of calm and a rational head," she said.
On the US economy, Ms Hobson said investors should not necessarily believe US President Donald Trump's promises to boost infrastructure spending and cut taxes have been solely responsible for a rallying share markets.
"I think it's rallied on some of those ideas but I think mostly the US market has rallied on strong fundamentals," Ms Hobson said.
"Yes, some of the rhetoric has led to some of the spikes like the 'Trump Bump'.
"But the one thing I wouldn't be doing right now is let my politics rule my portfolio."
With the world focused on warnings of retaliation from Mr Donald Trump, Ms Hobson said escalating threats from the White House are not helping efforts for a diplomatic solution with North Korea.
"We're hoping that diplomacy might be a very viable solution here," she said.
Worldwide markets weakened on North Korea tensions
With US markets closed for a Labor Day holiday, investors have looked to Europe where key indices in London, Paris and Frankfurt ended slightly weaker on the North Korean tensions.
Ms Hobson sees China's role in negotiating a solution as critical but very complex given current tensions with the US and its links to North Korea.
"I think it's a difficult situation for the world, for South Korea, for China, Japan, Guam. But this is a global story now. Everyone is at risk," she said.
As a child of the Cold War growing up in the US Mid West, Ms Hobson said talk of a potential nuclear conflict had reminded many Americans of the fear and uncertainty about the unthinkable.
"A conversation about nuclear has not even been in the American lexicon in decades," she said.
"I can remember being a little child in my public school in Chicago and we would do safety drills where we were taught to hide under our desk.
"Obviously that would not save lives, but that was a regular part of our safety drill.
"So to have this conversation is a bit surreal for a lot of people, especially 40-somethings like myself."
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