Markets slide, dollar slumps as North Korea fears spike

Shutterstock     
       Swiss stocks were among those under pressure in Wednesday’s trade

Shutterstock Swiss stocks were among those under pressure in Wednesday’s trade

The S&P 500 index had its biggest one-day drop in nearly three months on Thursday (Aug 10) as investors fled riskier assets, with technology stocks leading the charge, in response to an increasingly aggressive exchange of threats between the United States and North Korea.

Earlier in the week, Trump said the US would unleash "fire and fury" on North Korea if it continued to threaten the U.S.

The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the USA presidential election on Thursday, but was down 1.22 points at 14.82 points on Friday.

Investors' unease over escalating tensions between the United States and North Korea had weighed on stocks earlier in the day, pushing gold and bond prices slightly higher.

News that United States producer prices unexpectedly fell in July earlier helped send the dollar lower.

"If the USA and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so", the editorial's authors said.

USA government bonds strengthened Friday as soft inflation data led investors to further scale back expectations for interest-rate increases from the Federal Reserve.

US stock indexes opened lower on Wednesday as investors turned risk averse.

Safe havens benefited from the move away from stocks - gold rising again to around $1,290 an ounce after surging 1.3 percent Wednesday - but other risky assets such as oil and copper held their price. We should also be aware of the risk of responding to geo-political shocks by selling assets: too often we find ourselves selling at the moment of highest fear, only to be out of the market as a rebound in stock market prices takes place as tensions wind down.

Investors bought bonds after the Labor Department said the consumer-price index increased 0.1% in July from the previous month.

"The market's dent only lasted for a week in April when tension rose between them after North Korea launched a missile".

The Dow Jones Industrial Average .DJI fell 204.69 points, or 0.93 percent, to close at 21,844.01, the S&P 500 .SPX lost 35.81 points, or 1.45 percent, to 2,438.21 and the Nasdaq Composite .IXIC dropped 135.46 points, or 2.13 percent, to 6,216.87. The Fed, which raised its key interest rate in March and June, has signaled it plans a third rate hike before the end of this year.

J.C. Penney Co. (JCP) slumped 17% after it reported a wider-than-expected second-quarter loss (http://www.marketwatch.com/story/jc-penney-shares-sink-after-losses-exceed-expectations-2017-08-11).

The US currency was down 0.3 per cent at 109.94 yen, following a retreat to 109.740, its weakest since June 15th.

Shares in several other big media companies also declined. On the Nasdaq, 1,440 issues fell and 1,386 advanced. The u.s. central bank, one of whose tasks is to contain the price rise, does not therefore appear to be obliged to accelerate the pace of the slow tightening of monetary that it has committed.

London's benchmark FTSE 100 index fell back 1.3 percent, driven by losses in the commodity sector.