Stocks down, gold up after North Korea threat

Marco Green
August 12, 2017

Global stock markets are firmly in the red after another escalation of tensions between North Korea and the United States.

By mid-morning in NY investors began to look for stocks to buy rather than offload and the Dow Jones industrial average was 38.65 points higher at 21,882.92 while the S&P 500 was...

The S&P 500 volatility index, a measure of investor fear, rose for the second day. The Dow slid 33.08 points, or 0.2 percent, to 22,085.34.

Geopolitical tensions were at the fore, after US President Donald Trump said North Korea would be "met with fire and fury" if its threats against America continued.

The Swiss franc was on track for its biggest single-day rise against the euro in more than 2 1/2 years.

Trump's top security adviser H.R. McMaster earlier told MSNBC that the U.S.is preparing for a "preventive war" with North Korea among other options on the table to deal with Pyongyang's nuclear and missile threats.

"Safe havens are bid and markets are a little uneasy".

Stocks are lower at midday as investors weighed the growing tensions between the US and North Korea.

The VIX rose further on Wednesday, rising as far as 12.11, its highest in nearly a month.

Pyongyang responded with threats to launch preemptive military strikes against the US, including targeting the Pacific island territory of Guam.

The Labor Department said its producer price index for final demand edged down by 0.1% in July after inching up by 0.1% in June. 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%.

ASIA'S DAY: South Korea's Kospi sank 1.7 percent to 2,319.71 and Hong Kong's Hang Seng lost 2 percent to 26,883.51. The figure showed a decline of 1.1% versus expectations for a 0.5% drop and reversing from a 1.9% gain in May.

The greenback slipped 0.83 per cent to a near two-week low against the Swiss franc and fell to 110.11 yen, its lowest in almost two months against the Japanese currency.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors there will repatriate funds should a crisis materialise.

Investor focus now turns to Friday's USA consumer price index data.

The Swiss franc eased about 0.2 percent to 0.9658 per dollar, having surged roughly 1.1 percent on Wednesday. The yield on the 10-year Treasury note fell to 2.23 percent from 2.26 percent late Tuesday. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman all rose and the Dow Jones US defense index was up 1.6% after hitting a record high.

Yields on core government debt fell. Meanwhile, the price of gold, a safe haven for nervous investors, climbed $16 or 1.28 percent to $1,278.70 per ounce at noon.

"Dollar/yen has already gone below 110.00 yen, and at this stage we are likely to see the pair begin to bottom out as the market finds time to assess the situation", said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

Gold prices increased 1% and the Swiss franc gained against all major currencies.

Other reports by Click Lancashire

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