Wall St set to open lower as tensions with N.Korea mount

Andrew Cummings
August 12, 2017

The Dow Jones Industrial Average was trading up 0.2% at 21,894, while the S&P 500 index was up by 0.2% at 2,442, and the Nasdaq Composite Index climbed 0.3% at 6,236.

Strong gains in NY, where the Dow saw repeated record highs up until three day ago, had kept investor optimism high when news of the conflict first broke, Currie said.

The price of gold, a safe-haven asset, hit its highest levels in two months as North Korea and the United States exchanged more threats, with North Korea outlining detailed plans for a missile strike near the Pacific territory of Guam.

The last time the S&P closed down more than 1 percent was May 17 when it fell 1.8 percent. The general also outlined plans to launch four Hwasong-12 ballistic missiles to strike the sea around USA territory Guam. In a note to investors, Paul Christopher, head global market strategist, and Tracie McMillion, head of global asset allocation, suggest, "the threat of a nuclear weapon is certainly more serious than previous threats, but that threat also may increase the probability of a diplomatic solution".


Nasdaq 100 e-minis were down 39.75 points, or 0.67 percent, on volume of 53,600 contracts.

The S&P's record close on August 7 likely helped fuel its latest sell-off.

Considerable weakness is also visible among tobacco stocks, as reflected by the 1.1% drop by the NYSE Arca Tobacco Index. Additionally, China weighed in on the standoff, saying in an editorial in state-run Global Times that Beijing will intervene if the U.S. strikes first against North Korea.

In more back-and-forth between President Trump and North Korea, Pyongyang General Kim Rak Gyom, leader of the country's strategic forces, said that "sound dialogue is not possible with such a guy bereft of reason and only absolute force can work on [Trump]".


Wall Street's widely followed measure of market anxiety, the CBOE Volatility index, was up 0.79 points at 16.77 on Friday, its highest since November. The strong performance of these companies is clearly related to the North Korea drama. Seagate shares rose 74 cents to $32.29. Regions Financial shed 23 cents, or 1.6 percent, to $14.07. 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. That is significant because yields fall when bond prices rise.

The weakness among oil service stocks comes even though the price of crude oil for September delivery is inching up USD0.01 to USD49.18 a barrel.

The biggest fallers were G4S down 24.7p to 305.9p, Standard Chartered down 20.9p to 783.1p, Prudential down 44p to 1,841.5p, Shire down 92p to 3,945p.

The Japanese yen strengthened by 0.5 per cent to around 109.70 per dollar. The euro edged down to $1.1727 from $1.1751.


Trucking and software stocks are also seeing notable strength in mid-day trading, while steel stocks have moved sharply lower on the day. Sony Corp. shares in Tokyo dropped 1.6 percent. The Shanghai Composite Index lost 0.2 percent to 3,275.57 and Hong Kong's Hang Seng was off 0.3 percent at 27,757.09.

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