Published: Sun, August 13, 2017
Business | By Max Garcia

Shares hit by US-North Korea tensions

Shares hit by US-North Korea tensions

The S&P 500 index had its biggest one-day drop in nearly three months on Thursday as investors fled riskier assets, with technology stocks leading the charge, in response to an increasingly aggressive exchange of threats between the United States and North Korea.

"I will tell you this, North Korea better get their act together or they're going to be in trouble like few nations ever have been in trouble in this world", Trump said.

USA stocks have been in retreat since President Donald Trump Tuesday issued a fiery warning to North Korea to halt its nuclear program. Hong Kong's Hang Seng Index plunged by 2 percent, while South Korea's Kospi Index slumped by 1.7 percent.

The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the USA presidential election on Thursday, but was down 1.22 points at 14.82 points on Friday.

"Given the great run we've had, seems like some sort of pullback wouldn't be surprising", said Michael Baele, managing director of investments at U.S. Bank Private Wealth Management.

Canada's main stock index turned slightly higher in early trade on Wednesday, as gains for gold miners and energy companies with higher commodity prices offset falls among financials.

Unease over the North Korean situation pushed the VIX, a measure of how much volatility investors expect in stocks, up 44.4 percent. Core prices had also been expected to climb by 0.2 percent. MetLife fell $1.38, or 2.9 per cent, to $46.93, while Synchrony Financial slid $1.01, or 3.3 per cent, to $29.24.

Retailers were all under pressure after Macy's and Kohl's each reported lower second-quarter sales, reviving worries about consumer discretionary stocks.

Shares of Apple, Amazon and Facebook fell more than 2% Thursday.

The Federal Reserve's hint about unwinding balance sheets, the possibility of the European Central Bank tapering stimulus and the looming debate about the USA debt ceiling in the fall challenge the market's recent performance, Mr. Baele said. The yield on three-year Treasurys fell 2.0 basis points to 1.804 percent and the return on benchmark five-year government bonds shed 2.0 basis points to 2.004 percent. Top automaker Hyundai Motor fell 2.07 percent to 142,000 won.

Eight of the 11 major S&P sectors were lower, with the consumer discretionary index's 0.59 per cent fall leading the decliners.

The latest sell-off was the most severe yet, amounting to the biggest single-day drop for the stock market in almost three months.

On the currency front, the United States dollar is trading at 108.82 yen compared to the 109.20 yen it fetched at the close of NY trading on Thursday. The euro fell to $1.1749 from $1.1752.

The index was also dragged lower after Beijing ordered probes into three major Chinese social networking platforms over outlawed content.

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