Wall St stops stocks' bleeding, for now; gold, yen tick up

Claudine Rigal
Août 12, 2017

Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe posted its largest weekly drop since the week before Donald Trump won the USA presidential election in November. And in a Friday morning post on social media site Twitter, Trump wrote: "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely".

The Dow Jones Industrial Average climbed 0.08% on Friday, Aug. 11, the S&P 500 gained 0.13%, and the Nasdaq added 0.64%.

Equity markets had traded with a soft tone in Europe and there was a sharp increase in selling pressure in NY with the S&P 500 index declining by close to 1.0%.

US indexes opened lower for the third straight day on Thursday as North Korea's threat to land a missile just short of the USA territory of Guam added fuel to simmering tensions with the United States.

The North Korea situation isn't the only thing weighing on stocks.

He said the crisis provided a "perfect trigger" for a correction at a time when many markets - including the FTSE 100 - were at or around record highs, leaving them vulnerable to a sell-off if investors think it is time to take profits.

Emerging market stocks lost 1.28 percent.

In Europe, France's CAC 40 fell 1.6 percent to 5,135 while Germany's DAX was down 1.3 percent at 12,133.

South Korea's KOSPI fell 1.7 percent to its lowest since May 24, but its losses for the week are a relatively modest 3.2 percent.

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

The Korean story has seen the yen gain around 1.5 percent this week, its biggest rise since mid-May.

Later on Friday, investors will look to U.S. July consumer price data for hints on the Fed's policy outlook and near-term moves in the dollar.

Neil Mellor, a currency strategist with Bank of New York Mellon in London, said the pound was "drifting towards the lows from last month against the dollar".

"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY.

"There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", said TD Securities in a research note.

The dollar index fell 0.32 per cent, with the euro up 0.42 per cent to US$1.1819. Basically if the streak of trading days without a 1%+ up or down day is going to be broken, it's better for it to break with a 1%+ down day than a 1%+ up day.

The decline in equity markets and a dip in U.S. bond yields triggered fresh demand for precious metals and gold pushed to fresh 2-month highs around $1,288.

The yield on the 10-year Treasury bond fell to 2.2% and is approaching its lowest level of the year.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories.

Earlier in the session, it marked its highest since June 8 at $1,288.92 an ounce.

About 7.5 billion shares changed hands on U.S. exchanges, well above the 6.25 billion average for the last 20 days.

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