Wall Street reels under North Korea tensions, tepid retail earnings

Wall Street reels under North Korea tensions, tepid retail earnings

Keeping up his tough talk, U.S. President Donald Trump told reporters that North Korean leader Kim Jong Un's government should "get their act together" or face the consequences, and suggested that his earlier threat to unleash "fire and fury" on North Korea was too mild.

Gold got an extra boost after data showed U.S. consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

In the first four days of the week, the Standard & Poor's 500 index swung from marking its latest record high to posting its biggest single-day drop in almost three months. 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. "The market is interpreting it as lowering the odds of the Fed raising rates in December", said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta.

The Vix, a measure of how much volatility investors expect in stocks, jumped to its highest level since May after North Korea revealed a plan to launch ballistic missiles toward a major USA military hub in the Pacific. Shares of Macy's lost 10% and Kohl's fell 5.8%. Hong Kong's Hang Seng dipped 1.1 percent to 27,444.00. The Russell 2000 index of smaller-company stocks gave up 8 points, or 0.6 percent, to 1,401.

"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.

In European markets, the French CAC 40 was down 0.7% and Frankfurt's DAX 30 shed 1.2%.

"The level which we are looking at now is $1,300".

Photo of purported Walmart gun display roils social media
The report noted that the company has not ruled out the possibility that the image may have been digitally altered in some way. Walmart has apologized for a display inside one of its stores that appeared to market firearms as back-to-school items.

The dollar was further weighed down on Friday by the soft USA inflation data.

USA stocks closed higher on Friday as Wall Street clawed back from a sharp decline in the previous session but the market still posted a weekly loss on lingering geopolitical uncertainties.

But losses soon resumed, with Tokyo edging down as the Nikkei again came under pressure from the strength of the safe-haven yen, which hit eight-week highs Wednesday against the dollar.

The latest U.S. economic data cemented expectations that inflation will remain subdued amid a robust labour market.

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 decline in equity markets and a dip in USA bond yields triggered fresh demand for precious metals and gold pushed to fresh 2-month highs around $1,288. Its weekly gain of 2.6 per cent is the largest since June 2016. "Indeed, the biggest increases in the price of gold have occurred when the United States bombed Libya in 1986, in the wake of the Gulf War in 1990, and, more recently, when ISIS attacks put oil supplies in the Middle East at risk".

Markets had seen a tentative recovery in risk appetite in U.S. and early Asian trading, but as the war of words resumed Asian stocks dropped back and London, Frankfurt and Paris all lost 0.5 to 1.2 per cent.

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