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

Trump warning over North Korea hits markets

Trump warning over North Korea hits markets

Eastern. The Dow Jones industrial average rose 0.1%, to 22,130.

Smaller-company stocks also fell sharply.

TECH SLIDE: Technology stocks, which lead all other sector stocks with a gain of more than 20 percent this year, fell the most.

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

"We saw a tentative recovery in risk appetite yesterday from the sell off inspired by North Korea but I think, justifiably that move is fading a little bit today", said Saxo Bank's head of FX strategy John Hardy.

Asian markets struggled again, with Japan's Nikkei feeling the pressure from the rise of the safe haven yen, which hit an eight-week high.

The Nasdaq composite lost 18.13 points, or 0.3 percent, to 6,352.33.

The dollar index.DXY was trading 0.2 percent up at 93.73.

Out of the U.S., preliminary estimates showed second quarter non-farm productivity, which measures hourly output per worker, rising 0.9% on an annualized basis, above the 0.7% increase that was expected. The yield on the 10-year Treasury note slipped to 2.21 percent from 2.25 percent late Wednesday. South Korea's Kospi also suffered a loss, giving back 0.4%.

Demand for safe haven assets moderated after gaining overnight in response to President Donald Trump's Tuesday warning of "fire and fury" if North Korea continued to make threats against the U.S. The hermit state responded to Trump's rhetoric by suggesting it could strike Guam.

The VIX, a measure of how much volatility investors expect in stocks, jumped 10.4%.

Outside of geopolitical concerns, disappointing company earnings and outlooks put traders in a selling mood.

IN A SKID: Avis Budget Group slumped 6.8% to $31.13 after the auto rental company cut its guidance following a weak second quarter. Rival TripAdvisor also slumped after its latest quarterly report showed that online and transaction revenue growth fell sharply.

However, shares of Dean Foods tumbled 20% to $US11.96 after the United States dairy processor posted quarterly results that fell short of expectations and downgraded its full-year forecast amid "a challenging and rapidly evolving retail environment". The stock was the biggest gainer in the S&P 500. Its shares slid 9.77, or 5.3%, to 174.02 dollars. Brent crude, used to price global oils, gained 10 cents to $52.24 in London. A strong jobs report last Friday gave the dollar index .dxy its strongest daily performance this year. In particular, euro/franc fell to as low as 1.1259 after starting the day at 1.1447. Natural gas gained two cents to 2.82 dollars per 1,000 cubic feet. In the meantime, gold rose to a near two-month high of $1276.07 an ounce. On Comex, the gold price climbed 0.9% to $1,274.30 an ounce, while silver rose 1.4% to $16.61 and platinum added 0.4% to $976.15. Simon Property Group fell 2.1% to $162.86. The franc was up 1.1% against the dollar at SF0.9639 and was 1.2% higher vs the euro at SF1.1311. Elsewhere, Germany's DAX has dropped 0.7% and London's FTSE 100 is off 1.1%, putting it in on pace for its biggest single-day percentage loss since April.

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