North Korea tensions are set to cause a stir on Wall Street

Andrew Cummings
August 12, 2017

Stocks closed slightly lower Wednesday, making up much of the ground they lost earlier following a rare batch of earnings disappointments by Walt Disney and other big companies.

In overseas trading, stock markets across the Asia-Pacific region saw further downside during trading on Thursday. Netflix lost 1.5 per cent. The umbrella financials group slipped 0.3 per cent.

European stock markets fell further in opening trade on Friday on intensifying fears over North Korea, dealers said.

A spokesman for the Korean People's Army said in a statement it was "carefully examining" plans for a missile attack on the US Pacific territory of Guam, which has a large USA military base.

"People are concerned that a shouting match could lead to someone pressing a button", said Irwin Michael, portfolio manager at ABC Funds.

"It is a market that is beginning to encounter some major threats and of course the threat is geopolitical", said Peter Cardillo, chief market economist at First Standard Financial. "We do believe the trend is still up".

GOT A PULSE: Health care stocks, which have been in a slump, were headed higher.

The recovery fit a recent pattern of investors using dips to put more money in stocks.

Ralph Lauren gained $10.38, or 13.3 percent, to $88.53, while peer-to-peer loan company LendingClub added 99 cents, or 18.1 percent, to $6.45. Gold extended its gains into a third day, hitting a 9-week high of $1287.73 an ounce.

Advancing issues outnumbered decliners on the NYSE by 1,432 to 1,310.

Wall Street put a floor under global equities on Friday after a weak inflation reading brought investors back into US stocks even as tensions between the United States and North Korea continued to escalate, though the geopolitical fears still drove safe-haven buying of gold and the yen. By the end of the day almost $1 trillion in equity had been lost globally.

The statement has dominated the headlines, and is one of the main drivers in the markets.

"There was some skittishness earlier but then some buyers stepped in", he said.

"At least in this segment, investors apparently remain reluctant to seek gold's safe haven".

After a dip of as much as 0.52 percent earlier in the day, investors appeared to take some comfort in Tillerson's comments, said Richard Steinberg, managing director at HighTower Advisors in NY. While the Nasdaq climbed 39.68 points or 0.6% to 6,256.56, the Dow inched up 14.31 points or 0.1% to 21,858.32 and the S&P 500 edged up 3.11 points or 0.1% to 2,441.32.

Against the greenback, the Swiss franc eased about 0.1 per cent to 0.9645 per dollar, having surged about 1.1 per cent on Wednesday.

Global markets have been on edge since Tuesday, when President Donald Trump warned North Korea of severe retribution should the authoritarian state proceed with any more missile tests or threats.

Missile makers Raytheon and Lockheed Martin have outperformed Wall Street by nearly four per cent in recent days and the Dow Jones US defence index is at a record high and on a seven-day unbroken run of gains.

The CBOE Volatility Index .VIX , the most widely followed barometer of expected near-term stock market volatility, ended at a session low of 11.11 after rising as high as 12.63. "You're less than 2 per cent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers". They were at 2.201 percent on Friday.

Gold fell $2.10 to $1,262.60 an ounce. They suggest the US and China, a North Korean ally, could work together to de-escalate the situation.

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