S&P 500 Poised For Worst Week Since November As Global Tensions Persist

Andrew Cummings
August 12, 2017

Reuters data show a 22 per cent perceived chance for a rate increase after the Fed's December meeting.

Wall Street saw a stock sell-off on Thursday as rising tensions between the US and North Korea filled investors with worry.

Trump issued a new tweet-warning to Pyongyang on Friday: "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely".

North Korea said it was considering plans to fire missiles at Guam, a USA -held Pacific island, after President Trump's warning on Tuesday.

"I do think we could see markets pull back between 1 and 5 percent".

The UK's stock market has fallen more than 1% as worries over the situation between the United States and North Korea continue to rattle investors.

The Dow industrials and S&P 500 rose 0.2% in recent trading, though the S&P 500 is set to end the week down 1.4%, its biggest loss since March.

Emerging market stocks rose 0.29 percent.

David Madden, market analyst at CMC Markets, said: "Stock markets in Europe are still feeling the pressure from the tension surrounding North Korea".

Manulife Financial Corp was down 1.1 percent to C$25.64.

"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay. Netflix fell 2.4 percent.

"We're not very oversold yet so the market still has more downside left to it".

CURRENCIES: The euro slipped 0.1 percent to $1.1176 while the dollar was steady at 109.20 yen. The Nasdaq composite fell 35 points, or 0.5 percent, to 6,336.

The dollar was further weighed down on Friday by the soft USA inflation data.

The CBOE Volatility Index - a measure of investors' expectations for swings in the S&P 500 over the next 30 days - surged 44% Thursday, to 16.04 - its highest level since U.S. Election Day.

The biggest fallers were Standard Life down 16p to 410.8p, Rio Tinto down 109.5p to 3,370p, Old Mutual down 6.2p to 195.3p, Anglo American down 39p to 1,238.5p. But Michael said the overall market was still expected to saw-tooth its way higher due in part to a batch of better-than-expected earnings and low interest rates, despite the shift toward raising rates. "Such investor hopes are also reflected in United States equity prices", said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.3 basis points to 2.189%.

The price of gold hit a two-month high of $1284.87 an ounce as investors moved away from shares.

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.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories.

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