Markets slide for third day on political tension

The dollar index fell 0.3 percent, with the euro up 0.36 percent to $1.1812.

Japanese markets were closed for a holiday but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe was on track to post its largest weekly drop since the week before Donald Trump won the US presidential election in November. We should also be aware of the risk of responding to geo-political shocks by selling assets: too often we find ourselves selling at the moment of highest fear, only to be out of the market as a rebound in stock market prices takes place as tensions wind down.

US President Donald Trump laid on another round of rhetoric against the North Korean plans for an attack on one of the United States’ military bases in the Pacific.

As well as monitoring the geopolitical backdrop, investors are looking ahead to an appearance Thursday by Bill Dudley, president of the U.S. Federal Reserve Bank of NY, for signs of the Fed’s outlook on the economy. “The North Korea situation appears to be the culprit”.

The Nikkei slumped to its lowest close for nearly three months Wednesday, leading an Asia-wide sell-off sparked by President Donald Trump’s apocalyptic warning over North Korea’s weapons programme.

“There is a low probability that we will have a war with North Korea“, he said, and a larger pullback in stocks is “a buyable drop”.

‘Traders are on red alert as the mention of war has sent them running for cover.

XAutoplay: On | Off Gold climbed as traders exited stocks and fled to more secure ground, as the back-and-forth saber-rattling between the US and North Korea escalated. The country previously threatened a further “all-out war, wiping out all the strongholds of enemies, including the US mainland” in a government statement. The broad-based S&P 500 dropped 0.2 percent to 2474.92 points, and the Nasdaq dropped 0.2 percent to 6370.46 points.

The Swiss franc reversed a two-week losing streak and gained 1.1 percent to as firm as 0.9611 per dollar.

The pan-European FTSEurofirst 300 index lost 1.06 percent and MSCI’s gauge of stocks across the globe shed 0.17 percent.

Health care equipment and services company Henry Schein declined amid a broader slide by health care stocks.

Spot gold XAU= added 0.2 percent to $1,260.26 an ounce. The yield on the benchmark 10-year Treasury fell as low as 2.197 percent, its lowest level since June 28, before inching back to 2.201 percent.

Despite the past week’s decline, the major indexes are in positive territory so far this year, led by the Nasdaq, which is up 16.2 percent.

Harmonised German consumer prices rose by 0.4% on the month and 1.5% on the year in July, according to the Federal Office of Statistics, confirming an earlier estimate.

The dollar last changed hands at 108.96 yen, down 0.2 percent.

A report released by the Labor Department on Wednesday said labour productivity climbed by 0.9% in the second quarter after inching up by a revised 0.1% in the first quarter.

However, shares of Dean Foods tumbled, trading 20.1 per cent weaker at US$11.96 as of 2.24pm in NY, after the U.S. dairy processor posted quarterly results that fell short of expectations and downgraded its full-year forecast amid “a challenging and rapidly evolving retail environment”.

Concluding with oil, WTI was last 1.0% down on the day, just above $48 a barrel, while Brent crude was 0.9% down, around $51.40 a barrel.