Trump escalates 'fire and fury' threat to NKorea

Federal Hall’s George Washington statue stands near the flag-covered pillars of the New York Stock Exchange. U.S. stock indexes edged lower in early trading Tuesday Aug. 8 2017 pulling back from

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

USA crude futures extended losses from Thursday, when they tumbled 2 percent on fears of slowing demand and lingering concerns over a global oversupply.

US Defence Secretary Jim Mattis, who often has emphasised the devastating costs of any conflict with North Korea, seemed to back up Trump's tone.

"The escalation of the geopolitical situation between the US and North Korea is beginning to rattle investors' nerves as was witnessed in the VIX index yesterday", said Peter Cardillo, chief market economist at First Standard Financial. Utilities was the only sector that closed positive on August 10.

On the commodity front, Gold, the safe haven precious metal, has risen to a two-month high on the geopolitical tension.

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.

Orders fell 4.7 percent from the previous quarter in April-June, suggesting demand is weaker than expected, though economists say the outlook for coming months is more upbeat.

In other corporate results, a number of companies reported forecast-beating numbers. Australia's S&P/ASX 200 dropped 1.2 percent. For the week, the index lost over 3% to register its biggest weekly loss since February of 2016.

With President Donald Trump warning North Korea of "fire and fury", investors have become concerned that the war of words between Washington and Pyongyang could spiral out of control. He also said the nuclear-armed nation should be "very, very nervous" if it even thinks about attacking the United States or its allies. Pyongyang said it was examining plans for attacking Guam, a USA territory in the Pacific with a military base.

After being undermined by strong United States data, gold reversed sharply to scale 8-week highs as tensions surrounding North Korea increased sharply.

The index was down 1.44% or 108.12 points to close at 7389.94 on Thursday in its worst performance for four months.

The market also awaited US consumer inflation data on Friday that would offer more clues about the pace of the US Federal Reserve's monetary tightening.

The Dow Jones Industrial Average rose 44.33 points, or 0.2 percent, to 21,888.34, the S&P 500 gained 6.01 points, or 0.25 percent, to 2,444.22 and the Nasdaq Composite added 32.10 points, or 0.52 percent, to 6,248.97.

The last time the S&P closed down more than 1 per cent was May 17 when it fell 1.8 per cent.

Charter Communications rose 2.9 per cent on news Altice is exploring a bid for the cable giant. It has been the leading S&P gainer so far this year, making it particularly vulnerable to a decline.

"The data confirms the Fed will have a wait-and-see attitude", said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco.

"The typical text book trade is that investors rush for safe havens".

The VIX, a measure of Wall Street volatility, spiked more than 30% Thursday.

The Federal Reserve's hint about unwinding balance sheets, the possibility of the European Central Bank tapering stimulus and the looming debate about the USA debt ceiling in the fall challenge the market's recent performance, Mr. Baele said.

Selling was broad. Declining issues outnumbered advancing ones on the NYSE 6-to-1; on Nasdaq, a 3.60-to-1 ratio favoured decliners.

Global benchmark Brent also fell 0.9 per cent to $51.44, after Thursday's 1.5 per cent drop.

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