Published: Sat, August 12, 2017
Business | By Max Garcia

Political tensions continue to weigh on world stocks

Political tensions continue to weigh on world stocks

U.S. President Donald Trump on Thursday warned Pyongyang again, saying his previous promise to unleash "fire and fury" may not have been strong enough after North Korea responded with a threat to fire missiles over Japan to land near the U.S. Pacific territory of Guam.

The Dow Jones industrial average closed 0.9% lower on Thursday, while the S&P 500 dropped 1.5% and the Nasdaq shed 2.1%. The S&P 500 lost 10.71 points, or 0.43 percent, to 2,463.31. The Russell 2000 index of smaller-company stocks ticked up 0.2% to 1,416.

North Korea has since threatened to launch missiles at the USA territory of Guam, and the country previously threatened "all-out war, wiping out all the strongholds of enemies, including the US mainland". Nigerian oil production rose by 34,300 bpd to 1.748 million bpd, while Saudi Arabia's went up by 31,800 bpd to 10.067 million bpd.

The data comes amid tepid inflation that has remained below the Fed's 2 percent target, despite low unemployment. The 30-year bond was last up 4/32 in price to yield 2.7871 per cent, from 2.794 per cent late on Thursday.

In Europe, Britain's FTSE 100 was down 1.1 percent to 7,306, while France's CAC 40 fell 1.1 percent to 5,058.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a selloff, and the tensions over North Korea proved to be the trigger.

The price of gold hit a two-month high of $1284.87 an ounce as investors moved away from shares.

Avis Budget Group slumped 9.9 percent after the auto rental company cut its guidance following a weak second quarter.

"When you have a market like we have had this year, and it has been amazingly calm, and you introduce a major source of uncertainty, there is bound to be some reaction", said Brad McMillan, chief investment officer for Commonwealth Financial.

Michael Kors climbed 21.5 percent after the luxury handbag and apparel designer and retailer's latest quarterly results beat analysts' forecasts as sales improved.

OIL: Benchmark U.S. crude lost 24 cents to $48.37 per barrel on the on the New York Mercantile Exchange while Brent crude, used to price global oils, declined 20 cents to $51.70 per barrel in London. On the Nasdaq, 2,082 issues fell and 669 advanced.

USA crude oil tumbled 2% to $48.59/bbl, failing to hold above $50 as a report from OPEC showed crude production among the group's members rose in July.

The pound was down 0.1% against the euro at 1.10.

The job openings data "were certainly the latest metric to highlight tightening labor market conditions in the US and to that extent that's certainly a dollar-positive data", said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The U.S. dollar fell to 110.48 yen from 110.72 yen late Monday.

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