Trump escalates North Korea tension

Daily December Comex Gold

Daily December Comex Gold

Stocks slid globally earlier in the day as well.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index fell 39.02 points, or 0.26 percent, to end the day at 15,217.33.

Stock markets around the world were under pressure on Wednesday amid increased tensions between the US and North Korea following comments from President Donald Trump, and big entertainment stocks were among the many decliners.

The three major US indices have sold off this week amid investors' jitters after Trump said on Tuesday that threats from Pyongyang would be "met with fire and fury like the world has never seen".

The Vix, a measure of how much volatility investors expect in stocks, jumped to its highest level since May after North Korea revealed a plan to launch ballistic missiles toward a major USA military hub in the Pacific. He doubled down on those remarks on Thursday, suggesting that perhaps his rhetoric wasn't harsh enough.

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"I will tell you this, North Korea better get their act together or they're going to be in trouble like few nations ever have been in trouble in this world", Trump said.

Separately, U.S. producer prices unexpectedly fell in July, recording their biggest drop in almost a year, weighed down by declining costs for services and energy products.

The CBOE Volatility Index - a measure of investors' expectations for swings in the S&P 500 over the next 30 days - surged 44% Thursday, to 16.04 - its highest level since U.S. Election Day. Core prices had been expected to rise by 0.2%. A separate Labour Department report showed initial claims for state unemployment benefits rose 3,000 to a seasonally adjusted 244,000 for the week ended August 5.

Overseas markets were also lower Wednesday.

Substantial weakness was also visible among internet stocks, as reflected by the 2.8% slump by the Dow Jones Internet Index.

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"Trump's response was aggressive and that's why the (stock) market turned lower", said Ken Polcari, director of the NYSE floor division at O'Neil Securities.

South Koreans watch a television displaying news broadcasts reporting on North Korea at a station in Seoul today.

Materials, a sector that includes gold producers and other resource-based companies, was the lone gainer among the index's 10 main sectors, rising 0.7 per cent.

"The war of words taking place between the USA and North Korea at the moment, which includes very real threats of action, is taking its toll on investor sentiment". Hong Kong's Hang Seng Index fell 1.22%. Weakness in the Consumer Discretionary and Utilities sectors weighed on the market. Germany's DAX Index fell 0.6 percent, while the UK's FTSE 100 Index retreated 1.2 percent, and France's CAC 40 Index slid 1.4 percent.

In the bond market, treasuries extended the upward move seen in the previous session amid ongoing geopolitical concerns.

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