Nikkei flat as North Korea fears recede; financial stocks tumble

Gladys Abbott
August 13, 2017

Instead, investors turned to the traditional safe-haven assets sought in troubled times, the Japanese yen strengthened 0.5 per cent to 109.73 to the dollar, an eight-week high, and the Swiss franc reversed a two-week losing streak and gained almost 1 per cent to 0.9650 per dollar.

At a briefing on opioid addiction at his golf course in Bedminster, New Jersey, Trump warned North Korea not to make any more threats against the United States, adding that North Korea would be "met with fire and fury like the world has never seen". "Whether it is a credit crunch in China, policy error from the Fed, or fear of an over-valued USA stock market, there are many reasons to maintain a balanced multi-asset portfolio that has exposure to defensive asset classes and currencies".

Stocks are opening slightly lower on Wall Street after several companies reported disappointing results. Major U.S. indices had posted record highs in recent weeks.

"The yen is the big story really".

The Swiss franc, the other traditional safety-play among currencies, has benefited too.

Two big retailers saw their shares fall rapidly after they announced results this morning. This week has seen its biggest rise since June 2016.

Bond prices rose. The yield on the 10-year Treasury note slipped to 2.25 percent from 2.26 percent late Tuesday.

"If you strip away what's going on in North Korea, and if you strip away what's going on in Washington, which are things that are tougher to predict, the economy, the global recovery, earnings, it all paints a very positive picture for the rest of the year", Kravetz said.

Investors fled to gold on Wednesday as tensions between North Korea and the U.S. escalated, pushing the precious metal's price to an intraday high of $1276.2/oz.

Gains among technology companies helped snap a three-day losing streak for US stocks Friday, though the market ended with its worst weekly loss since March. The Dow and S&P 500 suffered their worst week since March, and Wall Street's fear gauge spiked by the most in nearly two years.

The S&P 500 (.SPX) lost 5.99 points, or 0.24 percent, to close at 2,474.92 and the Nasdaq Composite (.IXIC) dropped 13.31 points, or 0.21 percent, to 6,370.46.

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The lower close by the major averages came after remarks by President Donald Trump added to concerns about rising tensions between the USA and North Korea.

'Of course, it's all come at a time when share markets are due for a correction, so North Korea has provided a flawless trigger'.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent in early trading, while Japan's Nikkei was 1.2 percent lower as the stronger yen sapped investors' appetite. 'Pretty remarkable, perhaps even extraordinary, considering, ' said Tim Ash, strategist at fund manager BlueBay.

The euro was 0.18% lower against the greenback but remains the best-performing G10 currency so far this year with gains of more than 11% against the dollar.

Japan said on Tuesday it was possible that North Korea had already developed nuclear warheads and warned of an acute threat posed by its weapons programs as Pyongyang's continues missile and nuclear tests in defiance of United Nations sanctions. The annual rate stood at 1.8%, which was below the 1.9% observed last month and the forecast of 2.1%.

Oil service stocks showed a significant move to the downside on the day, dragging the Philadelphia Oil Service Index down by 1.9 percent.

Crude futures meanwhile extended losses on fears of slowing demand and lingering concerns over global oversupply.

At 10:34 a.m. ET (1434 GMT), the Toronto Stock Exchange's S&P/TSX composite index fell 70.95 points, or 0.47 percent, to 15,146.38.

Global benchmark Brent also fell 0.9 percent to $51.44, after Thursday's 1.5 percent drop. Copper, the bellwether industrial metal, was set for its first weekly drop in five weeks.

Tensions between the US and North Korea continued to simmer early Friday.

In a speech on Monday, St. Louis Fed President James Bullard said the current level of interest rates is likely to remain appropriate over the near term amid subdued inflation.

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