Wall Street falls after Trump warning to North Korea

Gladys Abbott
August 13, 2017

Trump ratcheted up his rhetoric toward North Korea on Thursday, saying it should be "very, very nervous" if it even thinks about attacking the United States or its allies, after Pyongyang said it was making plans to fire missiles over Japan to land near the U.S. Pacific territory of Guam.

The overall financials group, which accounts for roughly a third of the index slipped 0.9 per cent.

Australian shares were down 1.3 per cent, set for a weekly loss of 0.5 per cent.

Excessive fears surrounding North Korea seemed to have receded, traders say, but activity was subdued with Japanese markets closed on Friday.

"The latest threats over North Korea have finally escalated to the point where market has been obliged to react", Ric Spooner, chief market analyst at CMC Markets, wrote in a note.

"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", he added.

Many markets have climbed to record or multi-year highs, leaving them vulnerable to a sell-off. Most Americans are hoping the tough talk from President Trump and North Korean leader Kim Jong Un is just that. Hong Kong's Hang Seng Index plunged by 2%, while South Korea's Kospi Index slumped by 1.7%.

He said: "Equity markets, including Korea, have tended to react less and less to this posturing - the Korea Composite Stock Price index was only down 1% on Tuesday". Trump's comments followed reports the North has mastered a technology needed to strike the United States with a nuclear missile.

"While the US President insists on ramping up the war of words, there is a decreasing chance of any diplomatic solution", Carnell said. The pan-European STOXX 600 hit its lowest level since the end of March, down 1.1%. Small-company stocks fell more than the rest of the market. Apple is still up 35% for 2017 and hovers near a record high. The S&P 500 hasn't pulled back by 5% or more since June 2016.

Appearing on CNN's The Situation Room, Risch called the situation "dangerous" but wouldn't reject President Trump's threat to unleash "power the likes of which this world has never seen before".

ENERGY: Benchmark U.S. crude gained 39 cents to $49.95 a barrel in electronic trading on the New York Mercantile Exchange.

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

The dollar extended losses against the yen to hit a new two-month low.

The yen is often sought in times of geopolitical tension, partly because Japan has a big current account surplus.

The dollar inched lower to 109.99 yen on Thursday, holding above Wednesday's low of 109.56 yen, which was the greenback's lowest level since June 15.

In commodities, crude oil lost momentum after rising overnight on data pointing to declining USA inventories.

The dollar was steady against a basket of six major currencies at 93.385 after falling 0.2 per cent on Thursday, with disappointing U.S. inflation and jobs data adding to the greenback's woes.

The dollar was up 0.05 percent to 109.25 yen, after earlier falling to a sixteen-week low following data showing US consumer prices rose less than expected in July.

The Swiss franc was on track for its biggest daily gain against the euro since the Swiss National Bank removed its cap on the currency in January 2015.

"We believe continued sabre-rattling between the two nuclear powers could take gold prices higher still".

BIG GAINERS: Health care stocks were among the big gainers. Seagate shares rose 69 cents to $32.24.

The benchmark USA yield yesterday was just above 2.2 per cent, at its lowest level since late June, as investors bought up Treasuries, a classic safe harbor. By the end of the day almost $1 trillion in equity had been lost globally.

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