TSX falls as North Korea tensions spur flight to safety

Claudine Rigal
Août 12, 2017

The rhetoric between the USA and North Korea has continued to heat up, leading traders to look to safe havens such as gold and treasuries.

Wall Street stocks dropped early Thursday after North Korea announced a plan to send missiles towards Guam, raising the stakes of a nuclear standoff with the United States. The S&P 500 added 3.11 points, or 0.1%, to 2441.32, ending the week down 1.4%, its biggest loss since March.

In the cash market, the blue chip Dow Jones industrial Average is trading 22028.67, down 56.67 or -0.26%.

"As a portfolio manager, you say, 'Do I think we'll get a war out of this?'" said Torsten Slok, chief global economist at Deutsche Bank, referring to the back and forth between North Korea and President Donald Trump.

Frankfurt's DAX 30 was also down, shedding 0.1 per cent at 12,142.62 points.

The S&P's record close on August 7 likely helped fuel its latest sell-off.

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. Only utilities sector stocks eked out a gain on a day of mostly listless trading as investors kept an eye on the latest company earnings and geopolitical news.

The remarks followed a new report asserting that USA intelligence has assessed that Pyongyang has successfully produced a nuclear warhead that can fit inside its missiles.

David Madden, market analyst at CMC Markets, said: "Stock markets in Europe are still feeling the pressure from the tension surrounding North Korea".

Overseas markets were also lower Wednesday.

On Thursday, the CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the US presidential election.

Shares of Manulife, which reported better-than-expected results, fell after the company played down talk of a John Hancock spin-off.

Avis Budget Group Inc. slumped 9.9 percent after the vehicle rental company cut its guidance following a weak second quarter. The Nasdaq composite fell 45 points, or 0.7 percent, to 6,324.

Right now, we're going to treat the current selling as a much needed short-term correction.

After the bell, Twenty-First Century Fox shares were up 0.7 percent following the release of its results.

Data showed US 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.

Offsetting the declines was a 0.4 percent gain by the materials group, which includes gold producers.

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