Published: Sun, August 13, 2017
Markets | By Noel Gibbs

Trump warning over North Korea hits markets

Trump warning over North Korea hits markets

The dollar weakened against the yen, which is often sought in times of geopolitical tension.

The remarks, following North Korea's earlier revelation of a plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, gave investors a reason to pocket profit in the sectors, such as technology, that have been the biggest gainers in recent months, analysts said.

The focus on North Korea has largely overshadowed a Labor Department report showing an unexpected drop in US producer prices in the month of July.

A few hours after Trump's warning shot, Pyongyang retaliated by claiming it was planning to strike Guam - a USA territory - with missiles.

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Some investors, however, still maintained a bullish outlook on equities, expecting the war of words not to manifest into a military clash, with the pullback being temporary.

Saluzzi sees the North Korea concern as an excuse for traders to sell off in a market near record highs given the strength of earnings season and fairly good economic data that have come out recently.

"People want to digest the move and a downtrend now totally makes sense", Saluzzi said. Australia's S&P/ASX 200 dropped 1.1 percent to 5,696.80. China's yuan firmed 0.3 percent against the dollar in a third straight day of gains to hit its firmest level in 10-months on the back of a stronger fixing and continued corporate dollar selling, while data shows inflation holding steady. Economists had expected another 0.1 percent uptick.

The dollar weakened after news that US producer prices unexpectedly fell in July, recording their biggest drop in almost a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.

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The Australian dollar, which rose to a 19-month high near 90.00 yen late in July, was down 0.6 percent at 86.77 yen after slipping to a one-month low of 86.23 yen.

Macy's (M) slipped more than 10% as the retailer reaffirmed downbeat guidance, but reported second-quarter earnings and revenue that beat expectation (http://www.marketwatch.com/story/macys-shares-rise-after-earnings-revenue-beat-2017-08-10) s. Its shares slid $9.77, or 5.3 percent, to $174.02. Net income was $116.0 million, or 38 cents per share, up from $11.0 million, or 3 cents per share, for the same period past year.

Both of the down under dollars were weaker against the greenback, with the Aussie losing 0.31% to AUD 1.2674 and the Kiwi retreating 0.1% to NZD 1.3658.

The Japanese Yen saw broad gains in the wake of the rhetoric bandied about by the leaders of the USA and North Korea. European stocks (http://www.marketwatch.com/story/european-stocks-fall-as-caution-over-geopolitical-tensions-linger-2017-08-10) also closed in the red. While the French CAC 40 Index fell by 0.6 percent, the German DAX Index slumped by 1.1 percent and the U.K.'s FTSE 100 Index plunged by 1.4 percent.

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