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

Selloff in stocks takes a breather; gold and yen tick up

Selloff in stocks takes a breather; gold and yen tick up

The spot price of gold was 0.6 per cent to $US1285.53 an ounce overnight.

It was 0.2 percent lower at 1.1310 francs, compared with highs of 1.1537 francs hit a week ago.

"For quite some time the market hasn't really reacted to things on the Korean peninsula because we know from the past it is largely North Korean sabre-rattling, and it may yet be".

Dow Jones Industrial Average (DJIA) futures are trading below fair value, as the tensions between the USA and North Korea amplify.

The sabre-rattling - sparked when President Donald Trump stunned the world with an apocalyptic warning to unleash "fire and fury" on North Korea - continued Thursday as Pyongyang mocked the U.S. leader as "bereft of reason".

The European Union says it has slapped sanctions on nine North Koreans and four entities including the state-owned Foreign Trade Bank, in addition to those already on its sanctions list.

Korea said it is examining an operational plan for firing a ballistic missile towards Guam. The Standard & Poor's 500 index fell 0.2 percent, to 2,474.92.

USA equities steepened their losses late in the session after President Donald Trump said his earlier warnings to North Korea may not have been tough enough.

"The markets in general are very on edge and they're very leery about risk", Mariann Montagne, a portfolio manager at Gradient Investments, told Bloomberg.

Declining issues outnumbered advancing ones on the NYSE by a 2.29-to-1 ratio; on Nasdaq, a 2.47-to-1 ratio favoured decliners.

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.

The Dow Jones industrial average lost 123 points, or 0.6 percent, to 21,923.

A small rise in a measure of USA consumer prices pointed to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year, which would be favourable to equity investors.

USA stocks closed lower on Tuesday after Trump's comments sparked a late afternoon selling.

"The war of words between the leaders of the USA and North Korea continues to dominate investor sentiment", said Forex.com technical analyst Fawad Razaqzada. "What's happened in North Korea is enough to do that". Brent crude, used to price global oils, gained 40 cents to $52.54 in London.

It had retreated to trade nearly flat on the day at 109.17 yen per dollar by 0711 GMT but was still 0.2 percent stronger against the euro at 128.28 yen.

South Korea's KOSPI fell 1.7 per cent on Friday to its lowest since May 24, but its losses for the week were a relatively modest 3.2 per cent.

ENERGY: Benchmark U.S. crude gained 28 cents to $49.84 a barrel in electronic trading on the New York Mercantile Exchange.

Like this: