S&P 500, Nasdaq, Dow Fell Lower on August 10 amid Global Tensions

Gladys Abbott
August 12, 2017

"The strong global economy driven by strong earnings is really helping to minimize some of these concerns".

"If war erupts, it's impossible to say where it goes from there", said Michael Armbruster, managing partner at brokerage firm Altavest. Australia's S&P/ASX 200 edged down almost 0.1 percent to 5,760.90, while South Korea's Kospi fell 0.5 percent to 2,357.84.

The pan-European FTSEurofirst 300 index lost 1.19 per cent.

The dollar followed where stock markets went on a downward trajectory while the Japanese yen and Swiss franc rose as investors fled to safe haven currencies.

Ahead of the opening bell, futures for the Dow Jones Industrials fell eight points to 21,828.

Traditional safe-haven currencies including the Swiss franc and Japanese yen rose against the US dollar.

In a note sent to clients late on Thursday, the USA bank predicted the single currency would rise to $1.25 in the first quarter of next year and reach parity with sterling for the first time. "Tensions are still high and not going away at the moment".

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Sterling slipped below $1.30, close to a two-and-a-half-week low but it strengthened against the euro by 0.2%, following Tuesday's 10-month low.

The Swiss franc, meanwhile, looked set for its biggest one-day rise in more than two years. Germany's DAX Index fell 0.6%, the UK's FTSE 100 Index retreated 1.2% and France's CAC 40 Index slid 1.4%. It was down 0.2% at 108.98 yen, after retreating 0.7% yesterday. Japan is the world's biggest creditor country and there is an assumption investors there will repatriate funds in a crisis. Sterling was last trading at $1.3006, up 0.02 percent on the day. Yields on core government debt fell.

Gold got an extra boost after data showed U.S. consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

Stocks plunged, while US Treasuries and gold climbed, as US President Donald Trump's latest comments further inflamed tension with North Korea. "Indeed, the biggest increases in the price of gold have occurred when the United States bombed Libya in 1986, in the wake of the Gulf War in 1990, and, more recently, when ISIS attacks put oil supplies in the Middle East at risk".

OIL: Benchmark U.S. crude lost 12 cents to $48.47 per barrel on the on the New York Mercantile Exchange. The bigger surprise is that the cost to protect against declines in the kiwi against the U.S. dollar for one month shot up to the most expensive levels since April. The dollar was down 1.2 percent at 0.9627 Swiss francs, while an ounce of gold was 1 percent higher at $1,275.

The rhetoric between the US and North Korea has continued to heat up, leading traders to look to safe havens such as gold and treasuries.

S&P 500 e-minis were down 4.5 points, or 0.18 percent, with 209,543 contracts traded.

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