Published: Sat, August 12, 2017
Economy | By Annette Adams

North Korea Tensions Hit Global Stock Markets

North Korea Tensions Hit Global Stock Markets

Energy stocks also fell along with the price of crude oil.

"I think the market was looking for a reason to come off here", said Irwin Michael, portfolio manager at ABC Funds.

The pan-European FTSEurofirst 300 index lost 1.06 percent and MSCI's gauge of stocks across the globe shed 0.17 percent.

Nordstrom shares were up 1.63 percent at $45.60 following the apparel retailer's better-than-expected quarterly same-store sales.

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

About 15 minutes into trading, the Dow Jones Industrial Average had dropped to 21,947.15, down 0.5 percent from Wednesday's close, falling back below the 22,000 mark it first broke through on August 2.

Benchmark 10-year notes last rose 5/32 in price to yield 2.194 percent, from 2.211 percent late on Thursday.

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

Investors aren't freaking out about North Korea, but there was a noticeable shift in sentiment nonetheless.

U.S. President Donald Trump, in his latest warning to North Korea, said military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".

The Vix, a measure of how much volatility investors expect in stocks, jumped 34.8 per cent, the biggest increase since May.

Beyond geopolitical concerns, investors continued to size up company earnings reports.

Dow member Disney dropped 3.9 percent as it reported flat third-quarter revenues due in part to weakness in its cable subscription business.

Biotechnology, tobacco, and transportation stocks also saw considerable strength, while steel stocks extended a recent move to the downside.

Overall, the healthcare sector slumped 3.4 percent.

OIL: Benchmark U.S. crude lost 24 cents to $48.37 per barrel on the on the New York Mercantile Exchange while Brent crude, used to price worldwide oils, declined 20 cents to $51.70 per barrel in London. Heating oil fell 1 cent to $1.63 a gallon. Recent months have seen a strong contraction in USA crude stocks, with driving season clearly raising demand and subsequently reducing the overcapacity that has been evident in recent years.

Korea's Samsung Electronics fell 2.8% Friday. Silver gained 14 cents to $16.39 an ounce. The September copper contract was down two cents to $2.91 a pound. Crude briefly pared losses in late trading after USA inventories fell more than expected last week.

Across Europe, the Cac 40 in France slid 1.1% while Germany's Dax was flat.

"The market's reaction is an assessment of the geopolitics, also of liquidity", said Mr Ken Peng, a Hong Kong-based investment strategist with Citi Private Bank.

Emerging market stocks rose 0.29 percent.

The strong earnings season helped propel US stocks to record highs. South Korea's Kospi fell 0.2 percent.

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