Stocks Regain Ground But Still Close Lower For The Week

Angelica Greene
August 12, 2017

The sabre-rattling - sparked when President Donald Trump stunned the world with an apocalyptic warning to unleash "fire and fury" on North Korea - continued yesterday as Pyongyang mocked the U.S. leader as "bereft of reason".

The smaller than expected increase in consumer prices has led to optimism that the Federal Reserve will not be in a hurry to raise interest rates.

Even so, Wall Street remains near record highs.

The influential financial stocks were among the biggest drags on the index, with Royal Bank of Canada down 1.5 percent to C$92.88, and Manulife Financial Corp falling 4.7 percent to C$24.43, its largest drop since early August past year.

Overnight, Wall Street closed sharply lower after U.S. President Donald Trump issued a new round of fiery rhetoric, warning Pyongyang against attacking Guam or U.S. allies after it disclosed plans to fire missiles over Japan to land near the U.S. Pacific territory. Shares of Macy's lost 10% and Kohl's fell 5.8%. 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.

South Korea's KOSPI fell 1.7 per cent on Friday to its lowest since May 24, but its losses for the week were a relatively modest 3.2 per cent.

London stocks stumbled lower as Thursday's session was dogged by continued geopolitical tensions over the US-North Korea situation, uninspiring United Kingdom economic data and a heavyweight bunch of stocks going ex-dividend.

Germany's DAX Index fell 0.6%, the UK's FTSE 100 Index retreated 1.2% and France's CAC 40 Index slid 1.4%.

The euro, which hit its highest since the start of 2015 on August 2, dipped 0.1 percent to $1.1761 in morning trade in Europe.

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On the currency markets, the pound was down to a three-week low against the U.S. dollar but mainly due to earlier disappointing output and trade data.

The Japanese currency is often a safe have asset too.

"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY.

The pound was down 0.09% against the euro at 1.1049 and down nearly 0.2% on the dollar at 1.2978.

Looking at currency movements during the Asian session, the yen continued strengthening against the dollar, with the pair trading below the 110 level at 109.96 ahead of European trading.

The latest USA economic data cemented expectations that inflation will remain subdued amid a robust labour market.

The price of gold rose 1% to 1,274.39 U.S. dollars per ounce, with Fresnillo and Randgold Resources up 72p to 1,544p and 200p to 7,380p respectively. It was on course for a weekly rise of about 5%, the biggest such gain since July 2016. "Indeed, the biggest increases in the price of gold have occurred when the U.S. bombed Libya in 1986, in the wake of the Gulf War in 1990, and, more recently, when ISIS attacks put oil supplies in the Middle East at risk".

The dollar was steady against a basket of six major currencies at 93.412 after falling 0.2 percent on Thursday, with disappointing US inflation and jobs data adding to the greenback's woes.

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