Global stocks fall on rising unease over North Korea

11 August, 2017, 14:06 | Author: Brenda Erickson

Trump ratcheted up his rhetoric toward North Korea on Thursday, saying it should be "very, very nervous" if it even thinks about attacking the United States or its allies, after Pyongyang said it was making plans to fire missiles over Japan to land near the U.S. Pacific territory of Guam.

WALL STREET: U.S. stocks closed lower on Thursday led by technology companies. "The global economy is really on some firm footing", he said.

Markets have been focusing in recent weeks on the possibility of another USA interest rate hike this year, with the Fed concerned that the economy and inflation may be too soft.

The Russell 2000 index of smaller companies shed 13.20 points, or 0.9 percent, to 1,396.95.

"The markets are looking for direction after Wednesday's sharp moves and geopolitical concerns will dominate investor mindsets in the coming days", said Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt.

The dollar index fell 0.14 per cent, with the euro unchanged at US$1.1757.

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Japan is the world's biggest creditor nation and there is an assumption Japanese investors may repatriate their foreign holdings in times of heightened global uncertainty. "Safe-havens are bid and markets are a little uneasy". Sterling was last trading at US$1.3006, up 0.02 per cent on the day.

The euro fell about 1 percent against the Swiss franc (Exchange:EURCHF=) and was on track for its biggest one-day loss in 2½ years as investors flocked to the currency considered one of the oldest and safest investments. The US Dollar has already been firmly on the back foot in the past few months and the possibility of confrontation with North Korea provides further reason to be bearish on the US currency, particularly against low risk currencies.

German and USA sovereign bond prices also rose on the fear trade, sending yields lower despite recent strong readings of economic growth.

The won was down 0.4 per cent at 1,146.1 to the dollar by mid-morning, its weakest since July 12 and closing in on its 200-day moving average resistance at 1,146.8.

The yield on the benchmark 10-year US Treasury note fell to 2.254 per cent from its US close of 2.282 per cent on Tuesday. Prices for bonds and gold headed higher. United States crude rose 1.08 per cent to US$49.70 per barrel and Brent was last at US$52.78, up 1.23 per cent on the day. USA gold futures gained 1.63 per cent to US$1,283.20 an ounce.

The Nasdaq composite slid 18.13 points, or 0.3 percent, to 6,352.33.

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