Shares slip, yen and gold gain as Korea tensions escalate

Gladys Abbott
August 13, 2017

Wall Street's downbeat start followed a slide in major stock indexes in Europe and Asia. We should also be aware of the risk of responding to geo-political shocks by selling assets: too often we find ourselves selling at the moment of highest fear, only to be out of the market as a rebound in stock market prices takes place as tensions wind down. The Korean won fell against the US dollar.

NASDAQ measures a number of indices reflecting the reaction of USA's high tech markets and business environments on the country's political and economic developments which have an impact on high tech markets.

US stocks indexes were higher in afternoon trading on Friday, on track to snap a three-day losing streak, as tepid inflation data brought back investors to riskier assets, despite heightened tensions between the United States and North Korea.

Germany's DAX dropped 0.3 per cent to 12,117.07 and the CAC 40 of France lost 0.3 per cent to 5,132.22.

The euro was 0.14 percent higher against the dollar.

Investors have been jittery about North Korea since Tuesday when Trump said any threats from Pyongyang would be "met with fire and fury like the world has never seen".

Global stock markets ended their worst week in months amid rising tensions between the US and North Korea, though USA stock indexes steadied on Friday to close up slightly.

That prompted North Korea to say it was considering firing missiles near Guam, a U.S. Pacific island territory.

More news: Dow loses more than 100 points amid North Korea tensions

The influential financial stocks were among the biggest drags on the index, with Royal Bank of Canada down 1.0 percent to C$93.36, and Manulife Financial Corp falling 2.8 percent to C$24.93.

European bourses also looked set to open lower across the board, with Eurostoxx 50 futures already down 0.7 percent in early trade.

After North Korea claimed Trump is "driving" the Korean peninsula to the "brink of a nuclear war", the president responded with a tweet suggesting the USA is prepared to take military action against the communist nation.

Safe havens benefited from the move away from stocks - gold rising again to around $1,290 an ounce after surging 1.3 percent Wednesday - but other risky assets such as oil and copper held their price. The broader index closed at 2,319.71 points on Friday, down 3.1 percent from a week ago. Investors welcomed new data showing US inflation at the consumer level inched higher last month, suggesting that the Federal Reserve may be less likely to raise interest rates next month. The low rates have been in recent years one of the fuels of the stock market.

Within the internet sector, Synacor (SYNC) fell sharply after the internet content provider reported better than expected second quarter results but provided disappointing guidance. The Japanese market was closed in observance of the Mountain Day holiday.

The yield on the benchmark 10-year Treasury note settled at 2.191%, its lowest close since June 26, compared with 2.211% Thursday and 2.269% last Friday. On the Nasdaq, 1,462 issues rose and 1,227 fell. Australia's S&P/ASX 200 dropped 1.2 percent to 5,693.10.

BONDS: Bond prices rose.

Traders snapped up shares in companies that delivered strong quarterly results.

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