US stocks close lower after President Trump's remarks to North Korea
12 August, 2017, 18:30
NEW YORK, Aug 11 (Reuters) - Wall Street put a floor under global equities on Friday after a weak inflation reading brought investors back into US technology and other stocks, but gold and the yen still added slightly to the week's gains as tensions continued to escalate between North Korea and the United States.
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.
European markets opened lower on Friday on the back of war of words and escalating geopolitical tensions between the USA and North Korea. "For now, the North Korea situation bears watching as there's lots of tough talk, but we'll see if it escalates", said Kinahan.
But although USA equities on Wednesday managed to close only slightly down even after Trump's warning that "fire and fury" would rain on North Korea, yesterday the chickens came home to roost on Wall Street.
The recovery fit a recent pattern of investors using dips to put more money in stocks.
The overall financials group, which accounts for roughly a third of the index, declined 1.4 percent, while energy shares also fell 1.4 percent as oil prices turned down. Bond and gold prices, traditional havens for nervous investors, were little changed, and the VIX, a measure of how much volatility investors expect in stocks, slid 6.7% following a 44.4% jump the day before. Macy's sank 10.3 percent and Kohl's lost 5.8 percent.
Overnight, North Korea raised the stakes further by outlining a plan to fire a missile into the water near Guam, the U.S. territory in the Pacific.
And in a textbook-type cross-asset move toward safety in times of trouble, the Japanese yen hit an eight-week high against the U.S. dollar while spot gold also reached a two-month high.
Nevsun Resources Ltd offset some of the material group's gains, plunging 16.4 percent to C$2.75 after the company reported disappointing quarterly results.
Germany's DAX was flat, while France's CAC 40 fell 1.1 percent.
Gold added $3.90 to settle at $1,294 an ounce. On the Nasdaq, 1,846 issues fell and 953 advanced favoring decliners. Netflix was down 1.8 percent.
The UK's deficit in goods and services, the gap between exports and imports, climbed by £2 billion to £4.6 billion between May and June after a drop in exported goods.