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Stock markets lower, gold price continues to rise amid political tensions

12 August 2017

The London market endured heavy losses on Friday as America's stand-off with North Korea inspired another round of selling.

Investors will get an update on consumer price inflation, watched for its influence on the Federal Reserve's interest-rate thinking, while shares of Snap Inc. and Nvidia Corp. may draw attention after their earnings releases late Thursday.

While the Nasdaq climbed 39.68 points or 0.6% to 6,256.56, the Dow inched up 14.31 points or 0.1% to 21,858.32 and the S&P 500 edged up 3.11 points or 0.1% to 2,441.32.

In the eurozone, the Paris CAC 40 lost 0.3 percent compared with the closing level on Wednesday.

USA trading volume has been low with summer setting in and Congress expected to be in recess until September 5.

Michael Hewson, chief market analyst at CMC Markets, said these comments brought an entirely predictable counter response from Pyongyang.

Overnight, Wall Street closed sharply lower after Trump, with fiery rhetoric, warned Pyongyang against attacking Guam or USA allies after it disclosed plans to fire missiles over Japan to land near the U.S. Pacific territory.

Gold Prices Jump as Political Instability Moves Dollar Lower
The dollar index .dxy , which measures the US currency against a basket of other major currencies, fell 0.14 percent. USA stocks opened higher on Friday after suffering their worst single-day losses since mid-May on Thursday.

Stock markets around the world were under pressure on Wednesday amid increased tensions between the US and North Korea following comments from President Donald Trump, and big entertainment stocks were among the many decliners.

The Dow industrials and S&P 500 rose 0.2% in recent trading, though the S&P 500 is set to end the week down 1.4%, its biggest loss since March.

The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the election. But Mellor notes the rhetoric has reached a "different level". "So why buy risk assets (such as equities or credit) when the thematic at hand isn't going to resolve itself in the immediate short-term?"

Increased geopolitical concerns between the United States and North Korea limited the S&P 500's upward movement.

A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalisation drop from a record high US$61.36 trillion on Monday to US$60.43 trillion at the close on Thursday.

City Developments fell 4.5 per cent or 53 cents to $11.14, after posting a 17.9 per cent fall in net profit for the second quarter and announced a new CEO designate after Grant Kelley resigned.

Gold fell $2.10 to $1,262.60 an ounce.

Futures lower as North Korea tensions linger
The Nasdaq finished the day at 6,216.87, a slide of 135.46, while the S&P 500 lost almost 1.5 percent, ending the day at 2,438.21. South Korea's KOSPI fell 1.7 percent to its lowest since May 24, but its losses for the week are a relatively modest 3.2 percent.

In other corporate news, shares of Snapchat parent Snap fell 13% after it reported earnings late Thursday that missed analyst forecasts.

The Bureau of Labor Statistics will publish its July inflation report at 8:30 a.m. ET. Eastern Time, alongside core CPI.

Emerging market stocks rose 0.29 percent. The precious metal miners benefited from the flight to safety, with bullion prices hitting near two-month highs on North Korean worries.

On the currency markets, the pound slipped 0.1% against the dollar to $1.2968 but rose 0.1% against the euro to 1.1034 euros. On Friday, fellow retailer J.C. Penney dropped 16% after its second-quarter loss exceeded expectations.

Biotech companies Celgene and Amgen lost 3.8 percent and 2.6 percent, respectively.

Investors piled into safe-haven assets such as U.S. government bonds, gold and the Japanese yen and sold off shares.

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