Saturday, 16 December, 2017

Global stocks slide as US-North Korea nuclear tensions rise

A salesman arranges a gold necklace in a display case inside a jewellery showroom on the occasion of Akshaya Tritiya in Kolkata A salesman arranges a gold necklace in a display case inside a jewellery showroom in Kolkata
Jo Caldwell | 13 August, 2017, 01:04

On Tuesday, President Donald Trump warned North Korea of "fire and fury" in response to recent threats from Pyongyang, which said it was examining plans for attacking Guam, a USA territory in the Pacific with a military base.

USA and Asian stocks plunged overnight, with investors instead fleeing to traditionally safer assets including German government bonds, among the best-rated and most liquid assets in the world.

WALL STREET: U.S. stocks closed lower on Thursday led by technology companies.

Now installed in the White House, Trump issued a new warning to Pyongyang on Friday, tweeting: 'Military solutions are now fully in place, locked and loaded, should North Korea act unwisely'. Japan was closed on a public holiday.

The precious metal is usually seen as a safe haven to investors at a time of geopolitical uncertainty.

The Swiss franc, the other traditional safety-play among currencies, has benefited too.

The euro eased 0.1 per cent to $1.1766, staying below a high of around $1.1910 set last week, the euro's strongest level in 2-1/2 years. The S&P hasn't moved more than 0.5 per cent in a day since July and has fallen more than one per cent only twice this year.

Gold extended gains after data showed USA producer prices unexpectedly fell in July, recording their biggest drop in almost a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.

"This selloff could be more than just a North Korea induced blip on the screen", Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a report on Friday.

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Canada's main stock index turned slightly higher in early trade on Wednesday, as gains for gold miners and energy companies with higher commodity prices offset falls among financials.

The VIX, a measure of Wall Street volatility, spiked more than 30% Thursday. The euro zone's version is at its highest since April, when France's election was rattling the region.

Pyongyang said it was examining plans for attacking Guam, a US territory in the Pacific with a military base.

"Although we certainly can get a five to seven percent correction, we don't think it's the start of a significant bear market".

Netflix also fell, giving up $2.58, or 1.4 percent, to $175.78.

The Dow Jones Industrial Average (DJIA) managed to end its three-day losing streak today, even though tensions with North Korea seem to increase by the hour.

Spot gold rose 0.3 percent to $1,264.50 per ounce at 0324 GMT, while USA gold futures for December delivery rose 0.6 percent to $1,270.40 per ounce. The Nasdaq composite fell 35 points, or 0.5 percent, to 6,336.

Cracks are showing in what has been a virtually non-stop US equity rally after a rapid escalation of tension between North Korea and the United States this week.

The kiwi has been on the back foot all week ahead of the Reserve Bank of New Zealand's (RBNZ) policy decision due on Thursday, when it is widely expected to keep interest rates unchanged at a record low 1.75 percent.

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