TSX falls 0.94% as oil drops, geopolitical tensions rise

On Thursday, the three major US indexes logged their worst performances since mid-May (http://www.marketwatch.com/story/US-stocks-set-up-for-another-day-of-losses-as-north-korean-tensions-simmer-2017-08-10) in a session dogged by geopolitical concerns.

The losses have been triggered by a standoff between Washington and Pyongyang, as the war of words between the two intensified.

“The slight bias to the upside (in stocks) is a result of the CPI number”.

“Because the numbers came in lower, the market saw that as an indication that the Fed won’t raise rates in September”, said Robert Pavlik, chief market strategist at Boston Private.

Federal-funds futures, used by investors to place bets on the Fed’s rate-policy outlook, on Friday showed a roughly 36% chance of a rate increase by the end of the year, down from 47% Thursday and 54% a month ago, according to CME Group data.

The Dow slumped 204.69 points, or 0.9%, to 21,844.01, while the S&P 500 dropped 1.5% to finish at 2,438.21.

Mining heavyweights BHP Billiton and Rio Tinto retreated 2-3 percent, while gold miners Evolution and Newcrest rose about 2 percent each.

The benchmark Korea Composite Stock Price Index lost 39.76 points, or 1.69 percent, to 2,319.71.

In Toronto, the composite index S&P/TSX has, nevertheless, yielded 40,87 points, to close at 15 033,38 points. It has been more than a year since the last 5% downdraft in stocks and more than 76 weeks since the stock market suffered a 10% loss.

Shares of Snap (SNAP.N) ended down 14 percent after hitting a record low following a miss on revenue and daily active users. On the Nasdaq, 1,462 issues rose and 1,227 fell.

Markets began to tumble Tuesday after President Trump promised North Korea will face “fire and fury like the world has never seen” if the country continues to threaten the US.

Energy stocks dropped 0.5 percent despite higher oil prices. The Japanese market was closed in observance of the Mountain Day holiday.

The Korean won fell against the U.S. dollar.

The data comes amid tepid inflation that has remained below the Fed’s 2% target, despite low unemployment.

“If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year”, said Sireen Harajli, FX strategist at Mizuho in NY.

The dollar index, which measures the greenback against a basket of six major currencies, held steady at 93.096, after slipping around 0.3 per cent on Friday.

Gold added $16.70, or 1.3 percent, to settle at $1,279.30 an ounce.

The dollar slipped to 109.04 yen from 109.26 late Thursday.

Consumer-focused stocks, media companies and banks accounted for much of the market decline.

“Of course, it’s all come at a time when share markets are due for a correction, so North Korea has provided a ideal trigger”. Its weekly gain of 2.6 per cent is the largest since June 2016.

Falling crude prices made oil & gas stocks a weight too, dropping 1 per cent with Tullow Oil the biggest faller.