North Korea tensions drag down stocks but boost gold

Andrew Cummings
August 13, 2017

The pan-European FTSEurofirst 300 index .fteu3 lost 1.11 percent. The S&P 500 gained 3.11 points, or 0.1%, to end at 2,441.32, supported by gains in consumer-discretionary, technology and health-care sectors.

Toshiba has at last reported earnings for the year ended in March, fending off a delisting for now, but the Japanese conglomerate could still be kicked out of the stock market if it cannot conclude the sale of its memory unit by the end of March.

The tech-heavy Nasdaq Composite Index ended the week 1.5 percent lower at 6,256.56, including a 2.1 percent plunge Thursday, as President Donald Trump delivered a warning to North Korean leader Kim Jong Un that the usa would respond to any further aggression.

"Of course it's all come at a time when share markets are due for a correction so North Korea has provided a ideal trigger".

The Korean won continued to fall versus the dollar, down 0.13 percent to 1,143.5 on Friday for a 1.6 percent decline on the week.

The data comes amid tepid inflation that has remained below the Federal Reserve's 2 percent target, despite low unemployment.

Chinese bluechips lost 1.6 percent, while Hong Kong's Hang Seng was 1.9 percent lower.

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


"This situation is beginning to develop into this generation's Cuban Missile crisis moment", ING's chief Asia economist Robert Carnell wrote in a note.

They suggest the US and China, a North Korean ally, could work together to de-escalate the situation. It fell to a one-week low of 92.99 a few minutes after the release of inflation figures.

Despite the risk-off attitude in the market, stocks in NY were taking back some losses at the London equities close, as bargain hunters entered the market following steep falls in USA stock indices earlier this week.

Several indexes closed lower overnight.

The Chinese volatility gauge jumped by the most since January 2016 to its highest level in more than seven months.

The dollar fell 0.39 percent against the yen.

The dollar widened losses against the yen to hit a two-month low.

The euro was 0.14 percent higher against the dollar.


Speculative positions in U.S. gold futures remain subdued, said UBS strategist Joni Teves.

"From a geopolitical perspective, we understand why the escalation in tensions will have shaken some of the complacency out of investors", said Eric Wiegand, senior portfolio manager at U.S. Bank Private Client Wealth Management. The Dow is up 34.62 points or 0.2 percent at 21,878.63, the Nasdaq is up 25.62 points or 0.4 percent at 6,242.49 and the S&P 500 is up 4.36 points or 0.2 percent at 2,442.57.

The dollar was further weighed Friday by the soft US inflation data.

As well as monitoring the geopolitical backdrop, investors are looking ahead to an appearance Thursday by Bill Dudley, president of the U.S. Federal Reserve Bank of NY, for signs of the Fed's outlook on the economy.

Spot gold rose 0.5 percent to $1,266.20 per ounce at 0054 GMT.

Crude futures extended losses on fears of slowing demand and lingering concerns over a global oversupply.

OIL: Benchmark U.S. crude rose 23 cents to settle at $48.82 a barrel on the on the New York Mercantile Exchange.

The Straits Times Index sank 1.31 per cent or 43.52 points to 3,279.72, down 1.4 per cent for the week.


Other reports by iNewsToday

FOLLOW OUR NEWSPAPER