Wall Street lower on US-North Korea tensions

Gladys Abbott
August 12, 2017

The major US stock index futures closed lower on Tuesday after President Donald Trump issued a warning to North Korea, saying that its threats will be "met with fire and fury". On the Nasdaq, 1,685 issues fell and 615 advanced favoring decliners. Lockheed Martin LMT.N , Raytheon RTN.N , General Dynamics GD.N and Northrop Grumman NOC.N all rose and the Dow Jones U.S. defense index .DJUSDN was up 1.6 percent after hitting a record high. Benchmarks in Taiwan and New Zealand also declined.

Canadian Tire Corp Ltd rose 3.4 percent to C$146.65.

KOREA JITTERS: North Korea and the United States traded escalating threats, heightening fears miscalculation might spark conflict. Trump's comments followed reports the North has mastered a technology needed to strike the United States with a nuclear missile.

Mattis said North Korea must stop isolating itself and "stand down" in its pursuit of nuclear weapons, and Pyongyang "should cease any consideration of actions that would lead to the end of its regime and the destruction of its people".

US stocks were on track for their biggest weekly loss in months, shaken by disappointing earnings results and an escalation of threats between the USA and North Korea.

Developments regarding the situation with North Korea may remain in focus next week, although traders are also likely to keep an eye on reports on retail sales, housing starts, and industrial production. The Dow slid 0.2 percent to 22,085.34. The S&P 500 and Dow were both coming off record highs.

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In Europe, the pan-continental STOXX 600 index fell 0.9pc, with falls deepening after a auto rammed a group of soldiers in Paris, injuring six, in what officials said was a suspected terrorist attack.

US employers posted a record number of open jobs in June and optimism among small-business owners improved, reports indicated. Job openings jumped 8 percent to 6.2 million, the Labor Department said Tuesday. That "looks high enough to be consistent with a 5 percent-plus pace for real GDP growth", said Jim O'Sullivan of High Frequency Economics in a report. It should be kept in mind that the inflation figures have the ability to impact the prospects of higher USA interest rates, and this will possibly have a direct correlation to the value of Gold.

"Given the great run we've had, seems like some sort of pullback wouldn't be surprising", said Michael Baele, managing director of investments at U.S. Bank Private Wealth Management. Still, he said, "the Washington, D.C., bedlam and North Korea's saber-rattling is muddying the broader landscape".

The Japanese yen strengthened by 0.5pc to around 109.70 per dollar. It was last up 1.2pc at 1.1305 per euro.

Separately, U.S. producer prices unexpectedly fell in July, recording their biggest drop in almost a year, weighed down by declining costs for services and energy products. Brent crude, used to price global oils, added 59 cents to $53.29. Brent crude, the global standard, lost 23 cents to $52.14 in London.

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