Global Stocks Selloff Stops at Wall Street; Gold, Yen Tick Up

Frederick Owens
August 13, 2017

Wall Street put a floor under global equities on Friday after a weak inflation reading brought investors back into USA technology and other stocks, but gold and the yen still added slightly to the week's gains as tensions continued to escalate between North Korea and the United States.

The yen has also registered its biggest weekly gain since May against the dollar amid speculation that investors of Japan, as the biggest creditor nation, would repatriate their funds should a war break out.

The Chinese volatility gauge jumped by the most since January 2016 to its highest level in more than seven months.

After threatening to visit "fire and fury" on North Korea, President Donald Trump said that maybe the warning "wasn't tough enough".

"We're not very oversold yet so the market still has more downside left to it".

"It's surprising that given Japan's proximity to North Korea the yen is seeing any benefit from risk aversion", said Lennon Sweeting, chief market strategist for, in Toronto. The index closed at its highest level since November 8, when Trump was elected president.

The Dow Jones Industrial Average rose 44.33 points, or 0.2 percent, to 21,888.34, the S&P 500 gained 6.01 points, or 0.25 percent, to 2,444.22 and the Nasdaq Composite added 32.10 points, or 0.52 percent, to 6,248.97.

South Korea's KOSPI fell 1.8 percent to an 11-1/2-week low, but its losses for the week are a relatively modest 3.2 percent.

Economists had forecast the CPI rising 0.2% in July and climbing 1.8% year-on-year.

More news: Korean shares end lower on foreign selling amid tensions over N. Korea

In currencies, the yen rose 0.8 percent versus the greenback at 109.2 per dollar (JPY=), the strongest level for the Japanese currency since mid June.

Shaun Osborn from Scotiabank said, "The yen is the big story really". The Japanese currency rallied broadly against most major currencies.

The dollar index (.DXY), which measures the US currency against a basket of other major currencies, fell 0.14 percent.

A small rise in a measure of United States consumer prices pointed to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year, which would be favourable to equity investors.

U.S. Treasury long-dated yields dropped to six-week lows, pressured by U.S. Reuters data show a 28-percent chance for a hike after the Fed's December meeting.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in U.S. crude inventories, leaving prices volatile. US gold futures gained 0.26 percent to $1,293.50 an ounce.

The market's backstop safety asset, gold, edged up to its latest two-month high of $1,288 an ounce.

If North Korea launches an attack that threatens the United States, China should stay neutral, but if the US attacks first and tries to overthrow North Korea's government, China will stop them, a Chinese state-run newspaper said on Friday.

"Gold and silver are higher, thanks mainly to their status as safe-haven commodities".

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