Trump's Tensions With North Korea Push Down Stocks

The threat, reported by he state-run KCNA news agency, came just hours after U.S. president Donald Trump warned any threat to the USA would be met with "fire and fury". In a note to investors, Paul Christopher, head global market strategist, and Tracie McMillion, head of global asset allocation, suggest, "the threat of a nuclear weapon is certainly more serious than previous threats, but that threat also may increase the probability of a diplomatic solution".

The CBOE Volatility Index, better known as the VIX and the most widely followed barometer of expected near-term stock market volatility, rose the most in about 12 weeks.The index ended up 4.93 points at 16.04, the highest level since November 8, when Trump was elected president. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman were all up, lifting the Dow Jones U.S. defense index 1.17 percent.

Wall St's three major indexes ended the day down with the Dow Jones Industrial Average down 0.15 per cent, while the S&P 500 lost 0.24 per cent and the Nasdaq Composite losing 0.21 per cent.

In the United Kingdom, the stock of TV giant ITV was down 1.9 percent in early trading, and Sky shares were down 0.5 percent, while Germany's ProSiebenSat.1 fell 1.2 percent.

Positive sentiment was also generated by a report from the Labor Department showing a modest uptick in consumer prices in the month of July.

Nordstrom shares were up 1.63 percent at $45.60 following the apparel retailer's better-than-expected quarterly same-store sales. In 3.08pm trading, the Standard & Poor's 500 Index fell 1 percent.

Markets opened down across Europe, with the FTSE 100 losing 44 points in early trading hitting 7,499.42.

'With little else to go on the global markets couldn't help but focus on Trump's North Korean "fire and fury",' said Connor Campbell, analyst at Spreadex.

North Korea's threat to carry out a missile strike on Guam continued to worry investors. The Dow also fell 0.5% to dip briefly back below the 22,000 mark, and the Nasdaq tumbled almost 1%.

Elsewhere, French conglomerate Vivendi saw its stock fall 2.1 percent in the morning hours, while Italy's Mediaset dropped only 0.3 percent.

The VIX, a measure of how much volatility investors expect in stocks, jumped 10.4%. "When earnings are not beating expectations there's a sell off in the companies, and we're just not seeing that money reinvested because of the geopolitical risks".

Valeant's stock, which rallied a day before following quarterly results, sank 9.6 percent to C$17.85 after it said its subsidiaries in Australia were the subject of a tax audit. The euro slid to 1.1752 dollars from 1.1793.

Benchmark U.S. crude rose 23 cents to settle at $48.82 a barrel on the on the New York Mercantile Exchange.

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