Published: Fri, August 11, 2017
Economy | By Annette Adams

North Korea nerves rattle stocks, lift gold, yen

North Korea nerves rattle stocks, lift gold, yen

In 3.14pm trading, the Standard & Poor's 500 Index inched 0.06 percent lower. With the drop on the day, the major averages are adding to the losses posted in the two previous sessions.

At 12.28pm eastern time (16.28 GMT), the Dow Jones Industrial Average was down 52.87 points, or 0.24 per cent, at 22,032.47, the S&P 500 was down 2.8 points, or 0.11 per cent, at 2,472.12.

Setting the mood music for markets on Thursday, the head of North Korea's Strategic Forces, General Kim Rak Gyom, continued the war of words between Pyongyang and DC overnight.

Earlier on Wednesday, US stocks were trading lower after President Trump's warning to North Korea to "not make any more threats" is met by just that as North Korea ratcheted up tensions threatening missile strike action against US military installations near Guam.

Secretary of State Rex Tillerson later insisted the USA isn't signalling it's about to mete out a military response despite threats from North Korea suggesting it could attack Guam, a US island territory in the Pacific.

Trump further ratcheted up the rhetoric in remarks this afternoon, suggesting that his "fire and fury" comments may not have been tough enough. Later, Defense Secretary James Mattis warned North Korea in a statement it would lose any conflict it initiates.

Some of the top performing gold and gold mining stocks also rose on the back of the heightened USA and North Korean tensions.

Excluding food and energy prices, core producer prices still dipped by 0.1 percent in July after creeping up by 0.1 percent in June. Hong Kong's Hang Seng was off 0.3 percent. It rose $15.70, or 1.2 percent, to $1,277.80 an ounce.

Economists had expected jobless claims to come in unchanged compared to the 240,000 originally reported for the previous week.

The Nasdaq, Wall Street's home to many high profile tech companies, finished the day down more than 2%. The index hit a life-high of 415.49 earlier. The company's stock (NYSE:DIS) dropped $4.15, or 3.88 per cent, to US$102.83. The index dropped to a one-month closing low.

Barrick Gold Corporation ABX stock popped 1.42%, while Newmont Mining Corporation NEM gained 1.01%.

To that end, gold prices shot up to near $1,300 an ounce - their highest level in several months.

"The markets are looking for direction after Wednesday's sharp moves and geopolitical concerns will dominate investor mindsets in the coming days", said Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt.

The influential financial stocks were among the biggest drags on the index, with Royal Bank of Canada down 1.0 percent to C$93.36, and Manulife Financial Corp falling 2.8 percent to C$24.93. Microsoft also managed to avoid market selloff with a 0.5 percent increase.

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

Japan's Nikkei had been down more than 1% overnight while South Korean shares also slipped.

Plus, Macy's earnings; Blue Apron's first report; and the latest Tesla news. The trend appeared to overshadow strong quarterly revenue growth.

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