Wall Street tumbles on North Korea worries

Wall Street fell amid rising tensions between the US and North Korea bringing the Dow Jones’ streak of nine straight record closures to an end
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13 August, 2017

It is now on track for its biggest weekly drop since the week before the November 8 USA presidential election.

Trump, whose threat this week to bring "fire and fury" was dismissed by North Korea, said Thursday that statement might not have been "tough enough".

USA indexes were trading at session lows on Thursday afternoon, with the Dow and the Nasdaq posting triple-digit point declines, as investors fretted over escalating tensions between the United States and North Korea. The index hit a life-high of 415.49 earlier. The Swiss franc and the Japanese yen also rose.

However, U.S. stocks recovered temporarily late on Wednesday as investors appeared to brush off the geopolitical concerns following encouraging comments from Secretary of State Rex Tillerson. "But with the rhetoric having gone to a different level, the market just can't afford to take that risk".

Mounting tensions between the United States and North Korea battered blue-chip stocks on Wednesday, knocking the London market's attempts of securing a record high.

In Europe, the Stoxx 600 Index finished the day with a decline of 1 percent from the previous close. The euro zone's version is at its highest since April, when France's election was rattling the region. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.1 basis points at 2.220 percent.

"Of course, it's all come at a time when share markets are due for a correction, so North Korea has provided a flawless trigger".

The Nasdaq is down 134.69 points, or 2.1 percent. "Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay. The FTSE 100 index of leading British shares declined 0.6 percent.

"We're through most of the earnings season and the valuations [in the stock market] become a bit problematic when you have something like North Korea come up, "says Maris Ogg, president at Tower Bridge Advisors".

The December gold contract was up US$12.40 to US$1,285.40 an ounce.

Materials, home to gold producers and other resource-based companies, was the only gainer among the index's 10 main sectors and was up 0.6 percent.

The September crude contract was up 20 cents to US$49.76 per barrel and the September natural gas contract was up seven cents to US$2.95 per mmBTU.

The Nasdaq composite slumped 135.46 points, or 2.1 percent, to 6,216.87. On the Nasdaq, 1,846 issues fell and 953 advanced favoring decliners. Copper, the bellwether industrial metal, was set for its first weekly drop in five weeks.

Among economic data, the U.S. Labor Department is likely to report that initial jobless claims remained unchanged at 240,000 for the week ended August 5.

Update: The FTSE 100 has slumped further into the red amid persisting fears over North Korea tensions, with the sell-off accelerated by a slump in U.S. markets.

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