Published: Sat, August 12, 2017
Money | By Armando Alvarado

North Korea standoff wipes $1trn off global stocks

North Korea standoff wipes $1trn off global stocks

The S&P 500 sank 1.7% from Tuesday to Thursday, the Dow fell 1.1%, and the Nasdaq dropped 2.4%.

The Dow Jones Industrial Average climbed 0.08% on Friday, Aug. 11, the S&P 500 gained 0.13%, and the Nasdaq added 0.64%. Inflation has risen 1.7 percent over the past 12 months, suggesting that inflation pressures are well under control. The euro has weakened against the dollar to last trade at $1.1755.

But in the US, Wall Street stocks rose as investors waded back into the market following a three-day sell-off, with high-flying technology companies like Apple and Microsoft doing especially well.

A Labor Department report showed its producer price index posted a surprise drop in July, down 0.1% for the largest slide in nearly a year.

The Labor Department said its consumer price index inched up by 0.1 percent in July after coming in unchanged in June. Economists are forecasting a pickup in the monthly core CPI index with a gain of 0.2% in July, up from 0.1% the prior month.

The producer price index (PPI) for final demand fell by 0.1% m/m in July instead of rising by 0.1% as expected.

Wall Street stocks posted their biggest declines in almost three months on Thursday as President Donald Trump doubled down on his warnings to North Korea over its nuclear programme.

"There is a continuation of flight to the safe havens after remarks on Thursday evening from Trump about North Korea", said Quantitative Commodity Research consultant Peter Fertig.

"What has changed this time is that the scary threats and war of words between the USA and North Korea have intensified to the point that markets can't ignore it", said Shane Oliver, head of investment strategy at AMP Capital in Sydney. Indeed, US equities sold off at the open and added to those losses this afternoon following President Trump's latest warning to North Korea.

But are investors really nervous about a possible military conflict with Kim Jong Un?

But U.S. stocks regained some lost ground, despite Trump's comments Friday that U.S. weapons are "locked and loaded", ready to respond if North Korea acts "unwisely".

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MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1.2 percent in its third session of declines, heading for a 2.1 percent drop for the week. The index bounced off its lowest closing level in six months.

Nevsun Resources Ltd offset some of the material group's gains, plunging 16.4 percent to C$2.75 after the company reported disappointing quarterly results.

Gains among technology companies helped snap a three-day losing streak for US stocks Friday, though the market ended with its worst weekly loss since March.

Markets in Italy, France and Germany also saw declines.

US stock futures were marginally softer on Friday.

The possibility of war breaking out on the Korean Peninsula is "very low" and tensions between the US and North Korea will probably dip around September or October, according to Yang Moo-Jin, a professor at the University of North Korean Studies in Seoul. Trading was thinner than usual, with Japanese markets closed for a public holiday.

USA gold futures for December delivery was mostly unchanged at $1,290.50 per ounce.

In the bond market, treasuries extended the upward move seen over the two previous sessions.

The 30-year bond last rose 6/32 in price to yield 2.7847 percent, from 2.794 percent late on Thursday.

The North Korea situation isn't the only thing weighing on stocks.

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