Gold Hits Two-Month High on North Korea Tensions

Gladys Abbott
August 12, 2017

Financial companies and department store operators were among the big decliners.

Stocks fell the most since May on Thursday, extending a decline began when President Donald Trump warned North Korea over aggression.

The last time the S&P 500 fell over 1 percent was on May. 17.

The Nasdaq lost 2.1% to 6,216.87.

THE QUOTE: "Risk-averse sentiment is dominating global equities markets, and US indices have retraced from record levels over the last two days".

South Korea's benchmark Kospi fell 1.1 per cent to the lowest since June 21, while the won fell the most in three weeks.

Trump's threats have escalated since reports broke at the beginning of the week that North Korea had successfully produced a nuclear warhead that could fit inside its missiles. The back and forth put investors in a selling mood for the third day in a row.

The CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, rose to a near three-month high of 15.36.

Lukman Otunuga, research analyst at FXTM, said: "Today's main focus and event risk for the USA dollar, will be the pending inflation report from the United States Federal Reserve, which should offer fresh clues on the pace of monetary tightening". "As long as it doesn't go beyond just a war of words, this is going to be short-lived".

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The increased geopolitical tensions this week, centred on the Korean peninsula and the nearby USA territory of Guam, have caused stock markets around the world to fall back as investors turn cautious.

Biotech firm Novozymes meanwhile fell 3.3 percent after its second-quarter results disappointed and the firm cut its full-year guidance, citing weaker currencies.

The dollar index .DXY , which measures against a basket of currencies, fell 0.05 percent.

Net sales revenue rose 5.6% to EUR3.21 billion, "helped by our revenue growth initiatives, including pricing, and higher volumes in all segments". Prices for bonds and gold headed higher.

Falling crude prices made oil & gas stocks a weight too, dropping 1 percent with Tullow Oil the biggest faller. The remarks, following North Korea's earlier revelation of a plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, gave investors a reason to pocket profit in the sectors, such as technology, that have been the biggest gainers in recent months, analysts said.

Gold prices XAU= rose 0.2 percent to $1,287.30 an ounce, after surging over 2 percent in the previous two sessions to a two-month high. They plunged 2 percent on Thursday on fears of slowing demand and lingering concerns over a global oversupply.

In currencies, the yen strengthened 0.64 percent versus the greenback at 109.37 per dollar. It was last up 1.2% at 1.1305 per euro.

Major indexes in Europe slumped.

Dow e-minis were down 24 points, or 0.11 percent, with 22,166 contracts changing hands. It is poised to end the week down 1 percent. The Dow shed 0.2 percent.

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