Dow slips 100 points as tensions with N.Korea escalate

Xavier Trudeau
Août 13, 2017

Canada's benchmark stock index fell on Wednesday as heightened tensions between North Korea and the United States drove investors away from higher-risk assets and toward safe havens, such as gold.

The Dow Jones Industrial Average .DJI closed down 204.69 points, or 0.93 per cent, at 21,844.01, the S&P 500 .SPX lost 35.81 points, or 1.45 per cent, to end the session at 2,438.21 and the Nasdaq Composite .IXIC fell 135.46 points, or 2.13 per cent, to 6,216.87.

Declines in USA stocks accelerated Thursday, a pullback that many investors and analysts said was overdue with indexes at highs and volatility at record lows.

The biggest risers on the FTSE 100 Index were Coca-Cola HBC up 219p to 2,592p, WorldPay up 19p to 407.5p, Randgold Resources up 95p to 7,475p, WPP up 19p to 1,581p.

The Nasdaq Composite number was down 16.88 points, or 0.26 per cent, at 6,353.58.

However, the market changed its direction after President Trump warned North Korea that threats will be "met with fire and fury".

Cracks are showing in what has been a virtually non-stop USA equity rally after a rapid escalation of tension between North Korea and the United States this week.

The price of gold, a universal safe haven asset, has risen almost 3 percent over the past four days, hovering at $1,290 per ounce, its highest since early June.

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. Viacom slid 60 cents, or 1.9 percent, to $30.17.

J.C. Penney slumped as much as 18.25 percent to a record low after the retailer reported a bigger-than-expected quarterly loss.

Shares of Walt Disney were down 4.23 per cent, the biggest drag on Dow, as investors doubted whether the company can succeed with its plan to launch its own streaming services rather than rely on Netflix to reach online viewers.

In Asia, markets were mostly lower after disappointing Chinese trade data.

The decline was broad, with all the 11 major S&P indexes lower.

Manulife Financial Corp was down 1.1 percent to C$25.64. Core prices had been expected to rise by 0.2 percent.

Energy stocks fell along with the price of crude oil.

Elsewhere in commodities, the September crude contract was up 39 cents to US$49.56 per barrel, September natural gas advanced six cents at US$2.88 per mmBTU and the September copper contract declined two cents at US$2.93 a pound.

Materials, a sector that includes gold producers and other resource-based companies, was the lone gainer among the index's 10 main sectors, rising 0.7 per cent. Brent crude, the global standard, lost 28 cents to $52.09 a barrel in London.

The euro slid to $1.1732 from $1.1752. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index tumbled by 1.1 percent.

CURRENCIES: The U.S. dollar weakened to 110.35 yen from 110.72 yen.

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