North Korea Has Markets Nervous But Not Panicked

The benchmark S&P 500 index tumbled more than 1 percent on Thursday, only the third time this year it has fallen that much, while the Nasdaq shed more than 2 percent.

"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".

It commented, "That bleak assessment is likely to feed a growing debate in Japan about whether the country should acquire the means to launch preemptive military strikes".

The hope that the Fed will have to slow its rate-hike path appeared to stop, at least for now, the near $1-trillion loss in world stocks valuations this week triggered by the war of words between Pyongyang and Washington.

The S&P 500 and Nasdaq followed the Dow, falling 1.5 percent and 2.1 percent, respectively. The Swiss franc gave up some gains (http://www.marketwatch.com/story/swiss-franc-gives-up-some-gains-as-investors-monitor-us-north-korea-standoff-2017-08-10), as the USA dollar was slightly higher across the board. Hong Kong's Hang Seng Index dropped 1.69%, while mainland markets saw the Shanghai Composite dip 1.04%.

North Korea said it was completing plans to fire four intermediate-range missiles over Japan to land near the U.S. Pacific island territory of Guam in an unusually detailed threat that further heightened tensions with the United States.

Spot gold rose 0.5 percent to $1,266.20 per ounce at 0054 GMT.

In a note to investors, Paul Christopher, head global market strategist, and Tracie McMillion, head of global asset allocation, suggest, "the threat of a nuclear weapon is certainly more serious than previous threats, but that threat also may increase the probability of a diplomatic solution".


Kohl's stock dropped almost six percent despite better than expected earnings.

The dollar was further weighed down on Friday by the soft U.S. inflation data.

Excessive geopolitical fears surrounding North Korea seemed to have receded, traders say, but activity is expected to stay subdued with Japanese markets closed on Friday.

Overall, earnings growth for MSCI Europe companies was tracking 24 percent, Thomson Reuters data showed, while MSCI Euro zone companies were seeing 16 percent earnings growth for the second quarter.

German bond yields fell, gold and the Japanese yen surged and the leveraged bets on higher yielding currencies such as the Australian dollar took a beating.

Overall, gold continued to edge higher to the $1,280 per ounce area in European trading.

Crude oil prices fell on Thursday, on concerns of lingering global oversupply as Russian Federation considered a future output resumption and OPEC boosted its July production numbers.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories, leaving prices volatile.

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