Bargain Hunting May Contribute To Rebound On Wall Street


Biswas: While geopolitical risks due to escalating tensions on the Korean peninsula have been reflected in some modest declines in some worldwide equity markets in recent days, there has been many previous episodes of rising military tensions on the Korean peninsula. The settlement was the highest for a most-active contract since June 6.

Emerging market stocks lost 1.27 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.47 per cent lower.

US President Donald Trump's warning to North Korea has given gold momentum; investors are also awaiting US inflation data. It would be ideal for the precious metals if the dollar were to weaken again now, and that could happen courtesy if United States economic data is weaker.

But according to ICBC Standard Bank's Yuichi Ikemizu, the dollar is still weak and on a downtrend, which could help gold prices inch higher in the short term.

"What has changed this time is that the scary threats and war of words between the U.S. and North Korea have intensified to the point that markets can't ignore it", said Shane Oliver, head of investment strategy at AMP Capital in Sydney, as quoted by Reuters.

Trump's comments came after reports that North Korea has spurned a new round of sanctions approved by the UN Security Council.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors will repatriate funds should a crisis take place.

"We've seen this play before, and it usually plays out where it just goes back to the status quo", Jacobsen said.

S&P 500 Falls 1.4 Percent in Safety Flight on N. Korea Tensions
The NASDAQ Composite Index and Dow started the day lower but regained strength and recovered some losses as the day progressed. The Chinese volatility gauge jumped by the most since January 2016, to its highest level in more than seven months.

In Toronto, the composite index S&P/TSX has, nevertheless, yielded 40,87 points, to close at 15 033,38 points.

Spot gold added 0.2 percent to $1,262.35 an ounce, pulling away from the previous session's two-week lows.

The New Zealand dollar jumped to above $0.7370 after the release of the monetary policy statement.

But "the yen may be expected to lose its safe haven status if U.S". Gold rose 1.2%, while the Swiss franc was on track to post its biggest single day increase against the euro in about two-and-a-half years. The FTSE 100 index of leading British shares was 0.6 percent lower.

Aside from geopolitical concerns, gold-focused investors are awaiting USA inflation data set to be released on Friday (August 8). It had gained about 3% for the week so far.

Investors welcomed new data showing US inflation at the consumer level inched higher last month, suggesting that the Federal Reserve may be less likely to raise interest rates next month.

The pan-European FTSEurofirst 300 index lost 1.01 percent and MSCI's gauge of stocks across the globe shed 0.26 percent for a weekly loss of 1.6 percent, the largest since the week to November 4. It is poised to end the week down 1.9 percent.

Pan American Silver Corp, which reported second-quarter results late Wednesday, rallied 10.7 per cent to C$22.47.