Saturday, 19 August, 2017

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

People watch news report showing North Korea's Hwasong-14 missile launch on electronic screen at Pyongyang station North Korea US: Dow streak of records ends amid US-North Korea tensions
Nellie Chapman | 12 August, 2017, 14:39

The S&P 500 has closed within 0.30% of its opening level in 16 of the last 17 days of trading.

The negative headlines provided many investors with an opportunity to pocket some of their recent gains following a string of record highs fueled by strong corporate earnings.

Nervous investors drove shares lower earlier in the week, after President Trump declared Tuesday that the US would react with "fire and fury" to further nuclear provocations from North Korea.

The index closed 0.09% higher on Friday. Pyongyang said it was examining plans for attacking Guam, a US territory in the Pacific with a military base.

"The market hates uncertainty and that's certainly what we have now", said Ole Hansen, head of commodity strategy at Saxo Bank.

The Dow slid as declines in shares of Apple and those of Goldman Sachs, recently down 2.3 percent and 1.7 percent respectively, outweighed gains in shares of McDonald's and those of Coca-Cola, recently up 1.4 percent and 0.5 percent respectively.

Trump's comments on Tuesday ended the Dow's nine-day streak of record closes.

"While the two nations are at loggerheads, it is going to be hard to imagine money flowing into stocks".

Shane Oliver, head of investment strategy at AMP Capital in Sydney, said: "What has changed this time is that the scary threats and war of words between the U.S. and North Korea have intensified to the point that markets can't ignore it".

Trump told reporters further threats from North Korea would be "met with fire, fury and frankly power the likes of which this world has never seen before".

The CBOE Volatility Index, better known as the VIX and the most widely followed barometer of expected near-term stock market volatility, rose the most in about 12 weeks.The index ended up 4.93 points at 16.04, the highest level since November 8, when Trump was elected president.

Excluding food and energy prices, core consumer prices still crept up by 0.1% in July, matching the increases seen in the three previous months.

Inflation has risen 1.7 percent over the past 12 months, suggesting inflation pressures remain well under control.

The North Korea situation isn't the only thing weighing on stocks.

Shares rose more than 1.3% or 4.9p to 388.5p.

Traders sold off financial stocks amid speculation the Fed will decide to hold off on raising interest rates next month. Netflix lost 1.5 per cent. The company posted better-than-expected quarterly earnings but its sales missed expectations.

Oil prices rose before a report expected to show USA crude stocks fell for a sixth week. Yields on bonds move inversely to their price.

About 7.5 billion shares changed hands on USA exchanges, well above the 6.25 billion average for the last 20 days.

The biggest fallers were G4S down 24.7p to 305.9p, Standard Chartered down 20.9p to 783.1p, Prudential down 44p to 1,841.5p, Shire down 92p to 3,945p. The September copper contract was down two cents to US$2.91 a pound.

The Japanese yen strengthened by 0.5 per cent to around 109.70 per dollar. The euro rose to $1.1812 from $1.1774. Germany's DAX was flat, while France's CAC 40 fell 1.1 percent. The Shanghai Composite Index lost 0.2 percent to 3,273.71 and Hong Kong's Hang Seng was off 0.2 percent at 27,803.55.