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North Korea Tensions Hit Global Stock Markets

13 August 2017

In New York, the Dow Jones industrial average fell 36.64 points to 22,048.70, the S&P 500 index inched down 0.90 of a point to 2,474.02 and the Nasdaq composite index lost 18.13 points to 6,352.33.

The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the US presidential election on Thursday, but was down 1.22 points at 14.82 points on Friday.

The S&P 500 has hadn't a single day move of more than 0.5 percent since mid-July and has fallen more than 1 percent only twice this year.

The tech-heavy Nasdaq Composite underperformed its peers, falling 135.46 points, or 2.1%, to 6216.87.

The consecutive drops were primarily in response to the frightening feud between North Korea's Kim Jong Un and President Donald Trump, who promised to hit North Korea with "fire and fury" if it makes any further threats to the U.S. Kim immediately responded by threatening Guam - a U.S. territory - with a preemptive nuclear strike.

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"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. The yield on the 10-year Treasury note rose to 2.27% from 2.26%. December-dated gold futures finished the day up 1.3%, or $16.70 at $1,279.30 per ounce.

The stage was set for the US indexes to go lower early Wednesday as investors around the world reacted to the rising war of words between the USA and North Korea, pushing global market indexes lower. Twenty-First Century Fox gave up 46 cents, or 1.6 percent, to $27.57.

Retailers slid after department stores Macy's and Kohl's both said same-store sales continued to decline in the second quarter. TMX Group Ltd was up 3.2 per cent to C$68.02, while Quebecor Inc added 4.3 per cent to C$45.20 and Canadian Tire Corp Ltd climbed 5.7 per cent to C$149.89.

Focusing on United Kingdom stocks, Old Mutual was among the biggest fallers after saying it was taking a "cautious" approach to the dividend despite hiking half-year profits.

Travel and media companies led USA stocks lower in afternoon trading Wednesday as some rare earnings disappointments weighed on the market.

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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.

"The high drama has prompted traders to take their cash out of stocks, and invest it in safer assets like gold".

Biotechnology stocks are turning in some of the market's worst performances in morning trading, resulting in a 1.6 percent drop by the NYSE Arca Biotechnology Index.

Across Europe, the Cac 40 in France slid 1.1% while Germany's Dax was flat. Hong Kong's Hang Seng Index plunged by 2%, while South Korea's Kospi Index slumped by 1.7%. Brent crude, the global standard, lost 23 cents to $52.14 a barrel in London. The September copper contract was down two cents to US$2.91 a pound.

CURRENCIES: The dollar fell to 109.96 yen from 110.48 yen late Tuesday.

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North Korea Tensions Hit Global Stock Markets