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Wall St rebounds on Fed bets but set for weekly loss

14 August, 2017, 01:24 | Author: Samuel Sharp
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       A Swiss franc note on display at the Swiss National Bank

Stocks around the world fell sharply on Thursday and investors moved into the yen, gold and other safe-haven assets amid more aggressive talk between the United States and North Korea.

Shares of Snapchat parent Snap Inc.(SNAP) slid 11% a day after the company's earnings missed forecasts (http://www.marketwatch.com/story/snap-ceos-promise-cant-overcome-declining-ad-rates-stock-heads-toward-new-lows-after-earnings-2017-08-10), and the social-messaging company disclosed that average ad prices fell in the second quarter.

Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe .MIWD00000PUS posted its largest weekly drop since the week before Donald Trump won the US presidential election in November.

The dollar widened losses against the yen to hit a two-month low. In a tweet, President Donald Trump warned of military action "should North Korea act unwisely", noting that the U.S.is "locked and loaded".

"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.

"We're still close to the all-time high so that makes people a little nervous too, so they might say now might be the time to take a little bit of money off the table".

The pan-European FTSEurofirst 300 index .FTEU3 lost 1.01 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.26 percent for a weekly loss of 1.6 percent, the largest since the week to November 4. With the sell-off on the day, the Nasdaq and the S&P 500 fell to their lowest closing levels in a month. US -traded Nikkei futures NKc1 fell 2 percent to their lowest since mid-May.

"The yen is the big story really. The market is interpreting it as lowering the odds of the Fed raising rates in December", said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta.


The Labor Department said on Friday its Consumer Price Index edged up 0.1% in July, which was below the 0.2% rise expected by economists polled by Reuters.

Weaker-than-expected July consumer price data pointed to benign inflation that could cause the Federal Reserve to hold off from raising rates again this year. The dollar hit an eight-week low against the yen Thursday on U.S. US wholesale prices declined in July for the first time in nearly a year.

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

Crude futures extended losses on fears of slowing demand and lingering concerns over a global oversupply. It is now on track for its biggest weekly drop since the week before the November 8 USA presidential election.

USA gold futures for December delivery rose 0.2 percent to $1,281.90 per ounce on Thursday.

This gave investors some hope at the end of a jittery week, which could show the S&P's biggest weekly loss in more than four months, primarily due to a continuous exchange of threats between the United States and North Korea.

"Gold and silver are higher, thanks mainly to their status as safe-haven commodities".

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