Top earnings, North Korea concerns set the stage on Wall Street


The S&P/TSX composite index was down 39.02 points to 15,217.33, with most sectors finishing in the red while bullion stocks surged almost 1.9 per cent.

Europe's main London, Frankfurt and Paris markets started between 0.5 and 1.1 per cent lower and Germany's ultra-safe 10-year government bonds were trading at their highest prices since June. "We're not very oversold yet so the market still has more downside left to it".

The rise in geopolitical tensions this week, which heightened after U.S. President Donald Trump on Tuesday warned North Korea that it would face "fire and fury" if it threatened the United States, has drawn investor attention away from second-quarter corporate earnings season, which is winding down.

Trump continued to ramp up the rhetoric with a post on Twitter this morning indicating that the prepared to take military action against North Korea.

Nervous investors drove shares lower earlier in the week, after President Trump declared Tuesday that the USA would react with "fire and fury" to further nuclear provocations from North Korea.

"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. "That did temporarily shake investors' complacency, but we think markets are ready to move higher in the back half of the year, and earnings and economic data are going to drive that". These have ranged from an investigation into Russia's possible interference in the 2016 USA presidential election, to concerns about China's risky debt levels, to stubbornly low inflation in the U.S.

Investors seemed to focus instead on a lack of growth in emerging markets, as G4S reported a rise in revenue across all geographies except for the Middle East and India. Chinese blue chips closed flat but Hong Kong's Hang Seng fell 0.4 percent. The Nasdaq Composite Index fell 2.1% and closed the day at 6,216.87.

Markets are now focused on USA consumer price data for July, due later in the session.

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The dollar also slipped 0.26 percent lower against the yen to 110.01 yen.

In this environment, precious metals also secured strong buying support with gold pushing to 8-week highs around $1,275 per ounce before a retreat to $1,272 as the dollar regained support.

Gold prices were benefiting as traders favoured safe haven assets, hitting a two-month high of USD1,275.37. The stock is up 54% so far this year.

For later in the day, United States consumer price data for July are expected at 1330 BST.

The market indexes wavered between small gains and losses for much of the morning, then veered lower by afternoon.

Macy's M.N shares closed down 10.2 per cent and Kohl's KSS.N fell nearly 6 per cent as the companies continued to report a drop in quarterly same-store sales, stoking concerns that their turnarounds may still be a long way off.

Watch maker Fossil Group plunged 25 percent after reporting a weak quarter. Futures pointed to further declines on Wall Street, with S&P 500 futures down 0.3 percent at 2,465.70 and Dow futures falling 0.2 percent to 21,986.00.