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Equities fall on rising tension between US & North Korea

12 Août 2017

Secretary of State Rex Tillerson later insisted the US isn't signalling it's about to mete out a military response despite threats from North Korea suggesting it could attack Guam, a USA island territory in the Pacific.

A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalization drop from a record high $61.36 trillion on Monday to $60.43 trillion at the close on Thursday.

North Korea dismissed warnings by U.S. President Donald Trump that it would face "fire and fury" if it threatened the United States and outlined detailed plans for a missile strike near the U.S. Pacific territory of Guam.

"This selloff could be more than just a North Korea induced blip on the screen", Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a report on Friday. However, the Swiss franc fell broadly against other majors as traders were wary of a possible SNB intervention after yesterday's 1% jump against the dollar and the euro.

Meanwhile on the domestic front, US initial jobless claims for the week ended July 29 exceeded consensus estimates (http://www.marketwatch.com/story/US-jobless-claims-rise-by-3000-to-244000-2017-08-10), recording 244,000 versus 240,000 expected this morning.

UN Secretary-General Antonio Guterres said he was deeply concerned about the tensions on the Korean Peninsula and was "troubled" by the increase in confrontational rhetoric. Or are people using these geopolitical concerns as an excuse to take money out of the market -- tech stocks in particular?

The CBOE Volatility Index, the most widely followed barometer of expected near-term market volatility, was up as much as 12.63 points, its highest in more than a month. The euro zone's version is at its highest since April, when France's election was rattling the region.

MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.77 percent, on track for its third straight day of declines as it pulled further back from all-time highs.

"Of course it's all come at a time when share markets are due for a correction, so North Korea has provided a flawless trigger", he added.

The Dow is down 248.80 points, or 1.1 percent. Core prices rose 0.1% on the month with the year-on-year rate also at 1.7%.

Despite its recent weakening, the New Zealand dollar is still up more than 5 percent this year, setting a 26-month high of $0.7557 in July. He also said the nuclear-armed nation should be "very, very nervous" if it even thinks about attacking the United States or its allies.

"This situation is beginning to develop into this generation's Cuban missile crisis", said ING's Robert Carnell in a morning note to clients.

Gold futures prices GCZ7, +1.18% were up almost 1% to $1,273.80 per ounce. The contract fell 97 cents, or 2 percent, to close at $48.59 a barrel on Thursday.

The yield on the 10-year Treasury bond fell to 2.2% and is approaching its lowest level of the year. Banks and retail chains were also among the big decliners. That's a much steeper drop than the ones experienced by the Dow and S&P 500. Copper, the bellwether industrial metal, was set for its first weekly drop in five weeks.

USA producer prices unexpectedly fell in July, pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.

Equities fall on rising tension between US & North Korea