TSX hits 1-month low on risk aversion, lower oil prices

TSX hits 1-month low on risk aversion, lower oil prices

The three major USA stocks indexes ended higher on Friday, snapping three days of losses, as investors bet on slower U.S. rate hikes, but gains were muted by increasingly aggressive exchanges between the United States and North Korea.

The local market followed the lead of Wall Street and Europe's retreat from the escalating tensions between the United States and North Korea with the ASX 200 and All Ordinaries both falling around 1.2 per cent. Australia's S&P/ASX 200 edged down almost 0.1 percent to 5,760.90, while South Korea's Kospi fell 0.5 percent to 2,357.84.

The tentative gains "suggest that the headline shock value pertaining to the US-North Korea standoff is starting to dissipate, which is to say actual action will now speak much louder than words", said Briefing.com analyst Patrick O Hare. BNY Mellon FX strategist Neil Mellor told Reuters that in recent years, "the market hasn't really reacted to things on the Korean Peninsula" because in the past "it [has been] largely North Korean sabre-rattling".

Gold held steady at two-month high with spot gold rising 0.1 percent to $1,287.83 per ounce, putting the precious metal on pace for its biggest weekly gains since April.

The Swiss franc and Japanese yen are often sought in times of geopolitical tension or global financial stress, partly because both countries have big current account surpluses.

The Labor Department said its consumer price index inched up by 0.1% in July after coming in unchanged in June.

He said the crisis provided a "perfect trigger" for a correction at a time when many markets - including the FTSE 100 - were at or around record highs, leaving them vulnerable to a sell-off if investors think it is time to take profits.

Stocks rally, but end a bit lower
The broader Topix fell 1.1 percent to 1,617.90 and the JPX-Nikkei Index 400 shed 1.0 percent to 14,375.72. The Standard & Poor's 500 index rose 0.1% to 2,482 as of 1:45 p.m.

Emerging market stocks lost 1.27 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.47 per cent lower. On Tuesday, August 8, despite that new record high, the market pulled back and closed lower due to decreased risk appetite.

THE QUOTE: "Risk-averse sentiment is dominating global equities markets, and USA indices have retraced from record levels over the last two days".

This increase in tension between the United States and North Korea seem to be affecting the oil prices as well as they have dropped through the $49 region and now trade just above the $48 region as of this writing and continues to look weak.

Trucking and software stocks are also seeing notable strength in mid-day trading, while steel stocks have moved sharply lower on the day.

"But now we're seeing increasing rather than diminishing tensions", he said. For the week, the benchmark slipped 2.6%.

The September crude contract was up 20 cents to US$49.76 per barrel and the September natural gas contract was up seven cents to US$2.95 per mmBTU. The Treasury yield us 10-year fell to 2,201 % vs. 2,248 % Wednesday night and one of the warrants to 30 years 2,778 %, compared with 2,824 %.

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