Stocks fall for third day as USA, N. Korea tensions rattle markets

Xavier Trudeau
Août 12, 2017

The Dow Jones Industrial Average fell 0.9% to end at 21,844.01, the only close below 22,000 since breaking through that level for the first time August 2.

Gains among technology companies helped snap a three-day losing streak for US stocks Friday, though the market ended with its worst weekly loss since March.

The Standard & Poor's 500 index fell 5.99 points, or 0.2 percent, to 2,474.92. The S&P hasn't moved more than 0.5 percent in one day since July and has fallen more than 1 percent only twice this year. US stock indexes edged lower in early trading Tuesday, Aug. 8, 2017, pulling back from the market's most recent record highs.

The CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, was up 1.17 points at 12.12 points, its highest level in a month.

Investors on Thursday scampered to safe-haven assets such as gold and the Swiss franc, helping the precious metal hit a more two-month high.

On Tuesday, President Donald Trump warned North Korea of "fire and fury" in response to recent threats from Pyongyang, which said it was examining plans for attacking Guam, a USA territory in the Pacific with a military base.

Markets reacted with dismay to his fresh warning Thursday that his earlier threat to unleash "fire and fury" on the reclusive nuclear-armed state may not have been "tough enough".

Gold prices gained $2.60 to $1,292.70 U.S.an ounce.

"Both (PPI measures) were well below consensus and give us no hope that consumer price inflation is going to materially beat expectations", said Chris Weston, chief market strategist at IG Markets.

Still, analysts said the market seemed to be a bit skeptical that the North Korea situation would grow into a major crisis, noting that the losses were still not that deep.

In Australia mining stocks also benefitted from the strength of gold.

Buying interest is somewhat subdued, however, as the ever-escalating war of words between President Donald Trump and North Korea continues to raise geopolitical concerns. The Russell 2000 index of smaller-company stocks picked up 1.69 points, or 0.1 percent, to 1,374.23.

In Europe, equities dived, with London losing 0.8 per cent, while Frankfurt and Paris shed 1.3 per cent and 1.8 per cent respectively.

The dollar index .DXY fell 0.32 percent, with the euro up 0.42 percent to $1.1819.

"In the event that war should break out, and that leads to an acceptance of further loose monetary and fiscal policy in the U.S., we would expect a falling USA dollar real yield environment, giving renewed, and sustainable, impetus to monetary metals prices".

The Japanese yen last strengthened 0.03 per cent versus the greenback at 109.22 per dollar.

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