Could the US stop an unprovoked attack by North Korea?

Gladys Abbott
August 12, 2017

In a statement delivered at his Bedminster, N.J., golf club on Tuesday, Trump said, "North Korea best not make any more threats to the U.S. They will be met with fire and fury like the world has never seen".

Currency traders consolidated positions in the Japanese yen and Swiss franc, and nudged up the dollar index by unwinding some of the recent big bets on the euro.

Chinese stocks seemed little affected though, and Australian stocks rose Wednesday after a weaker Tuesday amid strong earnings reports from big banks.

Semiconductor, computer hardware, oil service, and retail stocks also saw considerable weakness, moving lower along with most of the other major sectors.

While European stocks have seen robust inflows in the wake of the French elections, their performance have lagged their US rivals since mid June. Futures pointed to further declines on Wall Street, with S&P 500 futures down 0.3 percent at 2,465.70 and Dow futures falling 0.2 percent to 21,986.00.

Tensions around the Korean Peninsula remain high after North Korea's recent missile tests followed by its provocative threat Wednesday to engulf a USA territory in a barrage of missiles, a ranking South Korean official said.

"Although we certainly can get a 5 to 7 percent correction, we don't think it's the start of a significant bear market", Peterson noted.

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The yen held steady against the dollar, taking a breather after having risen on Wednesday to its highest level in almost eight weeks.

Analysts said yields, which move inversely to prices, could fall further if the geopolitical tensions continue to rise - even if central bankers in the United States continue to talk of raising interest rates or scaling back stimulus programmes. The pan-European STOXX 600 index fell 0.49% and the blue chip STOXX 50 index slid 0.73% as all sectors declined. The Dow Jones industrial average fell 0.17 percent, with the tech-heavy Nasdaq composite index declining 0.28 percent.

Information technology fell 1.24 per cent, hurt by a 16.6 per cent plunge to C$66.50 in Kinaxis Inc stock.

"It's just a classic risk-off day", said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in NY.

Meanwhile, gold stocks bucked the downtrend, driving the NYSE Arca Gold Bugs Index up by 1.3%. The contract fell 97 cents, or 2 percent, to close at $48.59 a barrel on Thursday.

The benchmark 10-year yield jumped to trade at 2.28 percent after the jobs openings and labor turnover survey showed a record number of job openings for June .

CURRENCIES: The dollar slipped to 109.98 yen from 110.06 late Wednesday in Asia.

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