Gold Hits Two-Month High on North Korea Tensions

Xavier Trudeau
Août 13, 2017

US stocks closed lower on Tuesday after a late afternoon selling spree as investors fled for safety after US President Donald Trump vowed to respond aggressively to any threats from North Korea.

Utilities closed up 0.3 per cent while the materials sector was the S&P's biggest loser with a 0.9-per cent drop.

The negative headlines provided many investors with an opportunity to pocket some of their recent gains following a string of record highs fueled by strong corporate earnings.

Tokyo stocks were flat Thursday morning after a sell off the previous day sparked by fears over US-North Korea tensions, while Japanese cosmetic giant Shiseido surged on upbeat earnings.

S&P 500 e-minis were down 4.5 points, or 0.18 percent, with 209,543 contracts traded. The index had its biggest drop since mid-May a day earlier.

Dow e-minis were down 24 points, or 0.11 percent, with 22,166 contracts changing hands.

The UK blue-chip index fell 80 points, or 1.1%, to 7,417, and is now down 128 points over the last two sessions, as the standoff between the United States and North Korea has escalated.

Nasdaq 100 e-minis were down 1 points, or 0.02 percent, on volume of 49,062 contracts.

The recovery fit a recent pattern of investors using dips to put more money in stocks.

The decline was broad, with all the 11 major S&P indexes lower. "You're less than 2 percent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers", said Lerner.

"If you strip away what's going on in North Korea, and if you strip away what's going on in Washington, which are things that are tougher to predict, the economy, the global recovery, earnings, it all paints a very positive picture for the rest of the year", Kravetz said.

Japanese financial markets will be closed Friday for a national holiday.

Investors also drew some encouragement from new government data showing US inflation at the consumer level inched higher last month.

Data showed USA producer prices unexpectedly fell in July, recording their biggest drop in almost a year, while another set showed the number of Americans filing for unemployment benefits unexpectedly rose last week.

Inflation has risen 1.7 percent over the past 12 months, suggesting that inflation pressures remain well under control. Both are voting members this year on the Fed's rate-setting committee.

Insurers and banks, which invest in higher-yielding products such as foreign bonds, underperformed after U.S. Treasury yields fell on Wednesday, with the yields on the benchmark 10-year note hitting a six-week low.

Gold for December delivery was recently up 0.9% at $1,290.70 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest level since June 8. Wells Fargo still ended up 0.3 per cent at $52.71.

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