North Korea standoff wipes $1trn off global stocks

Daily December Comex Gold

European markets also slid in early trade after Wall Street indices suffered their biggest losses in almost three months Thursday, while the dollar struggled to recover from eight-week lows below 109 yen as investors fled to safe haven assets.

Falls were also seen on Wall Street, with the Dow Jones Industrial Average down 0.5% about 15 minutes into trading and the Nasdaq (Frankfurt: 813516 - news) tumbling by 0.6%. Over the next three months, the average gain has been good but not great - +1.15%. The Dow slumped by 1.1%, while the Nasdaq and the S&P 500 tumbled by 1.5% and 1.4%, respectively.

Even so, Wall Street remains near record highs. A separate Labor Department report showed initial claims for state unemployment benefits rose 3000 to a seasonally adjusted 244,000 for the week ended August 5. Both the core and headline rates are expected to have risen by 0.2 percent during July.

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.

Analysts said yields, which move inversely to prices, could fall further if the geopolitical tensions continue to rise - even if central bankers in the U.S. continue to talk of raising interest rates or scaling back stimulus programmes.

Tensions increased further late in the NY session following comments by President Trump that the U.S. would respond to any threat with "fire and fury, the like of which the world has never seen". He issued a new warning to Pyongyang, tweeting: "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely".

"I think what the president was doing was sending a strong message with language that [North Korean leader] Kim Jong-Un would understand, because he doesn't seem to understand diplomatic language", Tillerson added.

The Standoff With North Korea Ends One of Two Ways
China, which holds enormous financial leverage against North Korea, joined the other members of the council in the 15-0 vote. Alongside the United States, Pyongyang views its neighbors South Korea and Japan as its two other main enemies.

Financial markets have tended to quickly shake off North Korea's periodic saber-rattling in the past, dismissing it as bluster, but tensions have lingered this year amid signs that it is making progress in its ballistic missile program and on Trump's growing frustration with Pyongyang. The stock shed $1.50 to $4.61. Autodesk (ADSK) and Red Hat (RHT) posted notable gains.

FINANCIALS FALLING: Several financial sector companies also helped pull down the market. Macy's was down 9.7 percent after the company said its sales continued to decline in the second quarter.

ASIA'S DAY: Earlier, Asia bore the brunt of the mounting geopolitical uncertainty, with South Korea's Kospi index closing down 1.7 percent at 2,319.71 and Hong Kong's Hang Seng ending 2 percent lower at 26,883.51. Trading was thinner than usual, with Japanese markets closed for a public holiday.

The major European also saw further downside on the day.

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

In the bond market, treasuries extended the upward move seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 2.192%. "What's happened in North Korea is enough to do that".

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