Published: Fri, August 11, 2017
Culture | By Julio Duncan

Tensions over North Korea weigh on stocks but boost gold

Tensions over North Korea weigh on stocks but boost gold

In New York, the Dow Jones industrial average plunged 204.69 points to 21,844.01. The late sell-off pushed the SPX below the 50 day moving average, which acted as decent support in late-June / early July (chart) and briefly looked as if it might hold this afternoon.

The tech-laden Nasdaq Composite Index plummeted 135.46 points, or 2.1%, to close at 6,216.87. The Russell 2000 index of smaller-company stocks gave up 13.20 points, or 0.9 percent, to 1,396.95.

The S&P is trading near its most expensive valuation level since 2004, as measured by the price-to-12-month forward earnings ratio.

Australian stocks led regional markets lower this morning: The ASX dipped by 1.5% as major banks led the falls.

Traditional safe-haven currencies including the Swiss franc and Japanese yen rose on Wednesday, boosted by worries about increased tensions between the United States and North Korea.

"Obviously we are looking at the increased tensions between the USA and North Korea", said Brad Bechtel, managing director FX at Jefferies in NY.

North Korea claimed "only absolute force" can work on someone as "bereft of reason" as Trump and detailed plans to fire a salvo of missiles into waters around the U.S. Pacific territory of Guam. Trump's comments followed reports the North has mastered a technology needed to strike the United States with a nuclear missile.

Gold prices continued to rise after North Korea state media warned its missiles could surround the USA territory of Guam in an "enveloping fire" in coming weeks. But the moves were modest.

The New Zealand dollar was 0.79 lower against the greenback after New Zealand's central bank said it was slightly more uncomfortable with the high level of the local dollar than it had been in May.

The benchmark USA yield on Thursday was just above 2.2 percent, at its lowest level since late June, as investors bought up Treasuries, a classic safe harbor.

THE QUOTE: While the tough talk about the potential for war is scary, investors have heard it many times before.

"North Korea was fodder for the overnight trade, and as we headed into today we haven't seen any more saber-rattling", said JJ Kinahan, chief market strategist at TD Ameritrade.

Investors had rushed to safe-haven assets after strongly worded exchanges between Washington and nuclear-armed North Korea late on Tuesday.

RETAIL SLUMP: Disappointing quarterly results from big department store chains put investors in a selling mood.

South Korean stocks opened 1.2% down: And declines have continued in midday trade, with the index falling by as much as 1.74%.

Disney dropped 3.9 percent, its biggest single-day loss in more than a year, after the media giant reported a weak quarter and said it would pull its movies from Netflix and start two of its own video streaming services.

2 biotech stocks that rallied after earnings.

Of those, 52 percent delivered earnings and revenue that beat financial analysts' forecasts, according to S&P Global Market Intelligence.

Another source of support to bullion was data showing US producer prices unexpectedly fell in July, pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.

Oil prices edged higher after a report showed US refineries processed record amounts of crude in the latest week, eating into inventories, although a surprise jump in gasoline stockpiles limited gains.

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