Wall Street lower as investors weigh rising North Korea tensions

Daily December Comex Gold

Wall Street saw a stock sell-off on Thursday as rising tensions between the US and North Korea filled investors with worry.

The Labor Department said its consumer price index inched up by 0.1% in July after coming in unchanged in June.

"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, as quoted by Reuters.

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".

He said it is "a bullish sign that the equity markets are rebounding somewhat on a Friday, in spite of the fact that investors will need to wait for two days to react to any geopolitical news that comes out over the weekend".

At 12.28pm eastern time (16.28 GMT), the Dow Jones Industrial Average was down 52.87 points, or 0.24 per cent, at 22,032.47, the S&P 500 was down 2.8 points, or 0.11 per cent, at 2,472.12.

Phipps said investors were reassured after Dallas Fed President Rob Kaplan's said on Friday that the Fed needs more evidence of progress toward its inflation goal before raising rates again.

North Korea has announced a detailed plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, a major military hub and home to U.S. bombers.

Traders saw the chance of a rate hike in December falling to 40 percent from 42 percent before Friday's data, according to Federal funds futures.

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However, the S&P was still not far off record levels.

Oil prices steadied after slumping more than 1.5 percent overnight on oversupply concerns and the move lower on Wall Street, Reuters reported.

Yields of the benchmark 10-year U.S. Treasury fell to a one-and-a-half month low of around 2.20 percent in the Thursday session.

The Korean won continued to fall versus the dollar, down 0.13 percent to 1,143.5 on Friday for a 1.6 percent decline on the week. It has weakened 1.9 percent against the dollar this week, making it the worst performer among global emerging-market currencies. South Korea's Kospi lost 1.7 percent, while Hong Kong's Hang Seng slid 2 percent.

The 30-year bond was last up 4/32 in price to yield 2.7871 percent, from 2.794 percent late on Thursday.

Amid the hot rhetoric, US stocks sold off sharply on Thursday, with the S&P 500 falling more than 1 percent.

Instead, investors headed for safe havens, such as gold, which gained as much as 1.2% - a near two-month high - in Wednesday trading.

More than 430 stocks from all USA exchanges hit their lowest levels in 52 weeks or more on Thursday, the most for any session since mid-November right after Trump was elected. The forecast is for consumer prices in the world's biggest economy to increase by 0.2 percent over the previous month and 1.8 percent over the same month in 2016. "That reset is being triggered by North Korea geopolitical concern and stretched valuations", said Peter Kenny, senior market strategist at Global Markets Advisory Group in NY.

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