Stocks plunge amid growing North Korean-US tensions, gold continues rise

Escalating US-North Korea tensions hit markets
Dollar slumps, Tokyo tanks as North Korea tensions spike
Author

13 August, 2017

The Dow slumped by 1.1%, while the Nasdaq and the S&P 500 tumbled by 1.5% and 1.4%, respectively. The major index futures are now pointing to a modestly higher open for the markets, with the Dow futures up by 21 points. Core prices had also been expected to climb by 0.2%.

Volatility gauges from the United States to Japan rose after president Donald Trump said in response to a Washington Post report on North Korea's nuclear capabilities that further threats from the country would be met with "fire and fury".

"North Korea responding with a threat to U.S. territory after Trump warned [it] not to threaten the USA was never going to go down well".

Trump continued the back-and-forth with a post on Twitter this morning indicating that the U.S.is prepared to take military action against North Korea.

North Korea responded with a statement by its official KCNA news agency claiming Trump is "driving" the Korean peninsula to the "brink of a nuclear war". "Hopefully Kim Jong Un will find another path!" On the Nasdaq, 1,685 issues fell and 615 advanced favoring decliners. The index bounced off its lowest closing level in six months.

The price of gold, a universal safe haven asset, has risen almost 3 percent over the past four days, hovering at $1,290 per ounce, its highest since early June.

Escalating tensions around Pyongyang's nuclear ambitions sent a shiver through markets worldwide and pushed the dollar to below 109.7 yen in afternoon forex trade to an eight-week low against the safe haven currency, piling more pressure on Japanese stocks.

The rouble was little changed at 60.1 against the dollar and firmed 0.05 percent to 70.7 versus the euro. Japan was closed on a public holiday.

The major European also saw further downside on the day. Germany's DAX fared better, trading only 0.2 percent lower at 11,989.

Adding to the modest losses posted in the two previous sessions, stocks moved sharply lower over the course of the trading day on Thursday. 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%.

"It remains possible that we will see another brief lurch downwards, particularly in the technology sector that seems to be the locus of hedging activity, but the chances of this developing into a meaningful correction still looks remote at the current time", Shaoul said.

The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, which may shed some light on the outlook for the interest rates.

Stocks are opening slightly lower on Wall Street after several companies reported disappointing results.


More news