Stock markets under pressure amid US North Korea tension

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Stock markets around the world are dipping on Wednesday amid
rising tensions between the US and North Korea. 

Reports early on Tuesday indicated that North Korea was able to

build nuclear bombs
small enough to fit on a missile.
President Donald Trump then said any aggression from Kim Jong Un,
North Korea’s leader, would be met with “fire and fury and
frankly power, the likes of which this world has never seen
before.” Hours later, North Korea said it was considering a
missile strike on Guam, a Pacific island that holds a US
military base. 

The Dow Jones industrial average broke a 10-day streak of record
highs on Tuesday, closing down by 0.2%, or 33 points. Futures
were lower by about the same amount at 7:55 a.m. ET on Wednesday.
S&P 500 futures were down 0.4%, or 10 points. 

Outside the US, the Euro Stoxx 50 was down 1.6% and the FTSE 100
was nearly 1% lower in London. Major indexes in China, Japan, and
India were also lower.Screen Shot 2017 08 09 at 8.30.44 AMMarkets

Assets that investors prefer during periods of geopolitical
tension were stronger. Gold gained 1%, or $12.72 an ounce, to
$1,275.32. Treasurys rallied, pushing the 10-year yield down by 4
basis points to 2.237%. 

The US and North Korea have not made good on their threats, and
it’s still uncertain whether they would re-inject volatility into
a sleepy US stock market. The drop in US futures Wednesday is not
outsized relative to the recent trend; Tuesday was the 14th
day in a row the S&P 500 closed within 0.3% of
its opening level.

“It’s obviously difficult to predict” what could trigger a
stock-market correction, said Dianne Lob, a senior managing
director for equities at AllianceBernstein. “We’ve absorbed a lot
of the macroeconomic wall of worry” amid steady earnings and
economic growth.

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