North Korea Tensions Hit Global Stock Markets

Ivan Schwartz
August 13, 2017

Amid the hot rhetoric, US stocks sold off sharply on Thursday, with the S&P 500 falling more than 1 percent.

Global stock markets ended their worst week in months amid rising tensions between the USA and North Korea, though US stock indexes steadied on Friday to close up slightly.

In oil, Brent crude was dragged 0.5% lower at 52.46 USA dollars a barrel despite Opec forecasting increased demand for oil next year.

The broad-based S&P 500 fell less than 0.1 per cent at end at 2,474.02, while the tech-rich Nasdaq Composite Index dropped 0.3 per cent to 6,352.33. Eastern time. The Dow Jones industrial average added 39 points, or 0.2 percent, to 21,883. The Russell 2000 index of smaller-company stocks gave up 4.02 points, or 0.3 percent, to 1,410.15.

SIMMERING TENSIONS: North Korea revealed on Thursday a detailed plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, a major military hub and home to U.S. bombers. The strong performance of these companies is clearly related to the North Korea drama. "If we were threatened, the USA would take action and there'd be a Treasury rally", said Battle.

"When investors are optimistic to the extreme, it means that most of their money is already in the market and there's no more money coming in", Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida. Top automaker Hyundai Motor fell 2.07 percent to 142,000 won. Still, all three gauges are within 5 percentage points of record levels.

FINANCIALS FALLING: Several financial sector companies also helped pull down the market. Sony Corp. shares in Tokyo dropped 1.6 percent.

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While the French CAC 40 Index fell by 0.6%, the German DAX Index slumped by 1.1% and the UK's FTSE 100 Index plunged by 1.4%. Benchmark 10-year notes were last up 12/32 in price to yield 2.201 percent, from 2.242 percent late on Wednesday.

RETAIL SLUMP: Disappointing quarterly results from big department store chains put investors in a selling mood. Heating oil fell 1 cent to $1.63 a gallon. Wall Street was poised for a soft opening with S&P futures and Dow futures both down 0.2 percent. Its shares tumbled $11.35 to $61.99. Rival Advanced Micro Devices was also down 3.4 percent. Core prices had been expected to rise by 0.2%.

Bond prices rose. The yield on the 10-year Treasury fell to 2.20 percent.

Major U.S. indices had posted record highs in recent weeks. Altice USA, the subsidiary of the French company, added 0.1 per cent. Brent crude, used to price global oils, added 21 cents to $52.91.

CURRENCIES: The dollar slipped to 109.78 yen from 110.06 late Wednesday in Asia.

Sterling was also down 0.1% versus the euro at 1.104. Meanwhile, markets in Japan, South Korea and other Asian countries were also lower, and so-called futures signaled that USA markets would also open down.

Pension funds that holds billions of pounds worth of retirement savings are typically invested in the FTSE 100, meaning savers could see values fall amid sell-offs. Hong Kong's Hang Seng was off 0.3 percent.

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