Published: Sat, August 12, 2017
Money | By Oscar Reynolds

Nikkei flat as North Korea fears recede; financial stocks tumble

Nikkei flat as North Korea fears recede; financial stocks tumble

Japan and South Korea vowed a strong reaction if the North were to go through with the plan. Australia bucked the trend with a 0.4% gain.

"Geopolitics splashed cold water on the markets", said JJ Kinahan, chief strategist at TD Ameritrade. Small-company stocks fell more than the rest of the market.

Safe-haven demand rose after North Korea said it was "carefully examining" a plan to strike Guam, where a USA military base is located, shrugging off President Donald Trump's earlier warning that further threats to the United States will be met with "fire and fury".

The consumer discretionary index was one of its biggest losers with a 0.47 per cent drop.

TECH SLIDE: Losses among technology stocks led the market slide.

Guam's Homeland Security Adviser George Charfauros says officials there are confident "the U.S. Department of Defense is monitoring this situation very closely and is maintaining a condition of readiness".

Investors bought safe-haven assets such as gold, helping the precious metal touch a two-month high, and the Japanese Yen rose. The Nasdaq composite lost 68 points, or 1.1 percent, to 6,284.

"The market has been looking for an excuse to sell off and North Korea and the president gave the market that excuse", said David Schiegoleit, managing director at the U.S. Bank Private Client Wealth Management.

The pan-European FTSEurofirst 300 index lost 0.75 percent and MSCI's gauge of stocks across the globe shed 0.40 percent.

Spot gold added 1.2 percent to $1,275.60 an ounce. Macy's was down 8.9 percent after the company said its sales continued to decline in the second quarter.

Data showed US producer prices unexpectedly fell in July, recording their biggest drop in almost a year, while another set showed the number of Americans filing for unemployment benefits unexpectedly rose last week.

In Europe, Germany's DAX fell 1.1 percent, while France's CAC 40 slid 1.4 percent.

The dollar was steady at 110.005 yen after going as low as 109.560 overnight, its weakest in eight weeks. It is still the best performing G10 currency so far this year with gains of more than 11 percent against the dollar.

In commodities trading, U.S. crude oil was wallowing around $49 to the barrel amid speculation that a predicted gain in American output will offset OPEC-led efforts to trim a global glut.

MARKETS OVERSEAS: Major indexes in Europe were headed lower. Oil prices were headed higher.

Early in the fighting after a surprise attack, South Korean and American forces barely clung to a small pocket of the Korean Peninsula with Seoul and all of Korea overrun by the North.

Meanwhile, gold stocks bucked the downtrend, driving the NYSE Arca Gold Bugs Index up by 1.3 percent.

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