Wall Street higher but on track for deep weekly losses

Gladys Abbott
August 13, 2017

"The escalation of the geopolitical situation between the US and North Korea is beginning to rattle investors' nerves as was witnessed in the VIX index yesterday", said Peter Cardillo, chief market economist at First Standard Financial.

In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".

ASIA'S DAY: Earlier, Asia bore the brunt of the mounting geopolitical uncertainty, with South Korea's Kospi index closing down 1.7 percent at 2,319.71 and Hong Kong's Hang Seng ending 2 percent lower at 26,883.51.

Strong gains in NY, where the Dow saw repeated record highs up until three day ago, had kept investor optimism high when news of the conflict first broke, Currie said. U.S. Secretary of State Rex Tillerson said he did not believe there was an imminent threat. "That did temporarily shake investors' complacency, but we think markets are ready to move higher in the back half of the year, and earnings and economic data are going to drive that". The Nasdaq added 39.68 points, or 0.6 percent, to 6,256.56.

Germany's DAX fared better, trading only 0.2 percent lower at 11,989.

Stock movers: Henkel fell 3.4% after the maker of Schwarzkopf hair care products, Right Guard deodorant and Persil detergent posted second-quarter organic sales growth of 2.2%, which was below consensus of 3.2%, according to Investec. The S&P 500 is up 9 percent, while the Dow is up 10.6 percent. The FTSE 100 index of leading British shares was 0.6 percent lower.

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Separately, US producer prices unexpectedly fell in July, recording their biggest drop in almost a year, weighed down by declining costs for services and energy products.

However, Federal Reserve Bank of New York President William Dudley suggested on Thursday that the central bank was on track to raise interest rates once more as he expects sluggish inflation to rise over the next several months.

Despite the past week's decline, the major indexes are in positive territory so far this year, led by the Nasdaq, which is up 16.2 percent.

The U.S. equity market is hovering near record levels and volume has been tepid following the onset of summer.

The U.S. Treasury market rallied, with the benchmark 10-year yield shedding 3 bps to 2.21%.

The price of crude oil dropped more than two percent Thursday, the cost of a barrel falling to $48.49.

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