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S&P closes barely lower despite N. Korea tensions

14 August, 2017, 00:08 | Author: Paula Vaughn
  • Daily USDJPY

On Thursday, U.S. President Donald Trump said his earlier threat to unleash "fire and fury" on North Korea "maybe wasn't tough enough". Thursday's producer-price index came out tepid, analysts said. The Dow slumped 204.69 points or 0.9% to 21,844.01, the Nasdaq plummeted 135.46 points or 2.1% to 6,216.87 and the S&P 500 tumbled 35.81 points or 1.5% to 2,438.21.

Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe posted its largest weekly drop since the week before Donald Trump won the USA presidential election in November.

The Standard & Poor's 500 index fell 20 points, or 0.8 percent, to 2,453 as of 10:09 a.m.

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

"Traders should closely watch global equities today, with further falls and risk aversion likely pumping more safe-haven flows into precious metals", said Jeffrey Halley, a senior market analyst at OANDA.

But the yen added to an already-strong weekly rally of close to 1.5 percent, hitting its highest in nearly four months versus the dollar at 108.73 yen. While the German DAX Index has edged down by 0.1%, the French CAC 40 Index and the UK's FTSE 100 Index are both down by 1%.

"We assume markets will move on if it remains purely a war of words but the selloff looks durable", he added.

USA crude was down 0.9 percent at $48.16 per barrel, on track for a weekly loss of 2.9 percent.

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South Korea's KOSPI fell 1.7 percent to its lowest since May 24, but its losses for the week are a relatively modest 3.2 percent.

Instead, investors turned to the traditional safe-haven assets sought in troubled times, the Japanese yen strengthened 0.5 percent to 109.73 to the dollar JPY=.

Australian shares were down 1.3 percent, set for a weekly loss of 0.6 percent and Chinese and Hong Kong bluechips lost 1.6 percent and 1.9 percent respectively. Ten-year US yields dropped 4 basis points to 2.242 percent US10YT=RR and German equivalents fell 3 bps to 0.43 percent DE10YT=TWEB, a six-week low. Banks and retail chains were also among the big decliners.

Japan's Yen is another victor with USD/JPY dropping from the 111 region right down to the 109's we are presently seeing.

Away from the geopolitical drama, USA inflation data is due at 1330 GMT. The euro fell to $1.1735 from $1.1752.

Prices rose by just 0.1% last month, below expectations, with the annual inflation rate up to 1.7% from 1.6%.

The 30-year bond last /32 in price to yield 2.7933 percent, from 2.794 percent late on Thursday.

USA crude rose 0.41 per cent to US$48.79 per barrel and Brent was last at US$52.01, up 0.21 per cent.

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