Dow Jones witnesses worst drop since May amid geopolitical tensions

Cornelia Mascio
Agosto 12, 2017

Just hours before North Korea's warning, US President Donald Trump warned Pyongyang that if it continued to threaten Washington, the Communist nation would face "fire and fury" the world has never seen.

Small attributed a large part of the Dow's decline to disappointing earnings from Disney after the media giant reported a weak quarter, said it would pull its movies from Netflix and start two of its own video streaming services.

We will get a gauge of consumer confidence for August from Westpac and the Melbourne Institute.

The S&P 500 closed 0.24 percent lower at 2,474.92, with materials leading decliners.

USA crude was unchanged at $48.59 per barrel and Brent was last at $51.84, down 1.63 percent on the day.

Earlier on Thursday, North Korea revealed a plan to launch ballistic missiles toward a major USA military hub in the Pacific.

"However, I do not believe the situation has reached a state of crisis, and rather think we may turn this into an opportunity to overcome the serious security condition". Prices for bonds and gold headed higher.

Against the tense backdrop, the South Korean won extended its losses on Thursday and touched its lowest level against the dollar in about a month.

Canada's benchmark stock index fell on Wednesday as heightened tensions between North Korea and the United States drove investors away from higher-risk assets and toward safe havens, such as gold.

"It is a market that is beginning to encounter some major threats and of course the threat is geopolitical", said Peter Cardillo, chief market economist at First Standard Financial.

"At least in this segment, investors apparently remain reluctant to seek gold's safe haven".

The Toronto Stock Exchange's S&P/TSX composite index fell 39.02 points, or 0.26 per cent, to end at 15,217.33. The RBNZ left rates unchanged at record lows of 1.75 percent and maintained its "on hold" guidance for monetary policy.

September silver SIU7, +1.35% also added 22.2 cents, or 1.3%, to $17.085 an ounce, also in territory last seen about two months ago.

"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.

He said: "Equity markets, including Korea, have tended to react less and less to this posturing - the Korea Composite Stock Price index was only down 1% on Tuesday".

Investors opted for the perceived safety of US Treasuries, which pushed the yield on the 10-year note three basis points lower to 2.21 percent.

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