Wall Street slips on North Korea jitters; dollar down versus yen

US crude rises, gasoline falls as refineries restart

NEW YORK, Sept 5, (Agencies): Wall Street stocks fell on Tuesday as US trading reopened for the first time since North Korea’s biggest nuclear bomb test yet, and the US dollar and Treasury yields fell.

The drop in major US markets, which had been closed for Monday’s Labor Day holiday, followed that day’s global sell-off amid international condemnation of the nuclear test.

The Dow Jones Industrial Average fell 217.82 points, or 0.99 percent, to 21,769.74, the S&P 500 lost 21.28 points, or 0.86 percent, to 2,455.27 and the Nasdaq Composite dropped 74.39 points, or 1.16 percent, to 6,360.94.

The pan-European FTSEurofirst 300 index lost 0.11 percent and MSCI’s gauge of stocks across the globe shed 0.27 percent.

The dollar, also driven lower by a Federal Reserve official’s comments about low US inflation, hit a one-week low against the Japanese yen and was on track for its biggest decline in eight days against a basket of currencies.

The dollar index fell 0.32 percent and the yen strengthened 0.72 percent versus the greenback at 108.94 per dollar.

Benchmark 10-year Treasury notes last rose 20/32 in price to yield 2.089 percent.

In Europe, markets were also lower, with stocks cutting their morning gains and investors shifting into bonds and the yen.

The euro edged up 0.13 percent to $1.1911 as signs of rising inflation pressure in euro zone data put the focus back on Thursday’s European Central Bank meeting and its plans to reduce its stimulus program. Gold, the traditional go-to for traders when political concerns escalate, also eased on Tuesday, with investors booking profits after the previous session’s rise to a one-year high.

Spot gold added 0.3 percent to $1,338 an ounce.

US oil prices rose and gasoline fell as the gradual restart of refineries in the Gulf of Mexico, which had been shut by Hurricane Harvey, eased fears of a fuel supply crunch.

US crude rose 3.26 percent to $48.83 per barrel and Brent was last at $53.54, up 2.29 percent on the day.

US gasoline prices were 3.15 percent lower at $1.69 per gallon.

US

The three major Wall Street indexes fell more than 1 percent on Tuesday and were on track to mark their worst single-day fall in nearly three weeks, weighed down by mounting tensions on the Korean peninsula.

Wall Street may face a rough ride in September, typically the worst month for stocks, if there is a showdown in Washington over the US budget and the federal debt ceiling.

The CBOE Volatility index, Wall Street’s fear gauge rose 3.26 points to 13.39 and was on track to close higher for the first time in four days.

At 12:41 pm ET (1641 GMT), the Dow Jones Industrial Average was down 239.61 points, or 1.09 percent, at 21,747.95 and the S&P 500 was down 24.8 points, or 1 percent, at 2,451.75.

The Nasdaq Composite was down 85.79 points, or 1.33 percent, at 6,349.54.

Nine of the 11 major S&P sectors were lower. Financial stocks were the worst hit, putting them on track for their biggest one-day fall since mid-May, after an influential Federal Reserve policymaker struck a dovish tone on interest rates. Goldman Sachs’ fell 3.3 percent, dragging down the Dow; while the S&P was pulled lower by a more than 2 percent fall in shares of JPMorgan and Bank of America.

Shares of United Technologies were down 4.49 percent after Boeing said on Tuesday it would look closely at United’s $23 billion buy of Rockwell Collins. Boeing was down 1.2 percent and Rockwell inched up 0.5 percent.

Insmed shares more than doubled after the company said its drug for the treatment of a rare and serious lung disorder met the main goal in a late-stage study.

Declining issues outnumbered advancers on the NYSE by 2,132 to 722. On the Nasdaq, 2,053 issues fell and 812 advanced.

Europe

European shares inched lower on Tuesday dragged down by losses in the heavyweight financial sector as worries over North Korea persisted and caution grew before a European Central Bank policy meeting later in the week.

The pan-European STOXX 600 index fell 0.1 percent, giving up the slight gains seen earlier in the session, while euro zone blue chips declined 0.3 percent.

Euro zone banks were an outstanding faller, down 1.6 percent to their lowest level in around 10 weeks, with the sector back in focus ahead of Thursday’s ECB meeting that could shed light on the timing for an unwinding of big stimulus.

Shares in Banco Santander, BNP Paribas, UniCredit and Deutsche Bank were all down between 1.7 and 1.9 percent.

Energy stocks were among the top-gaining sectors, up 0.56 as oil prices rebounded.

Health stocks also rose, led by Germany’s Merck KGAA , up 2.4 percent, which said that it was considering selling its consumer health business.

Among mid caps, Aveva rose 25.7 percent. The British engineering software firm agreed to combine with Schneider Electric’s software business, creating a London-listed company worth more than 3 billion pounds ($3.90 billion). Shares in Schneider Electric advanced 0.3 percent.

Inmarsat fell 6.5 percent after broker Numis began its coverage of the stock with a “sell” rating, with analysts saying that they were cautious over the company’s revenue prospects and margin outlook.

Asia

Asian markets struggled on Tuesday while the safe-haven yen and gold held gains as traders fretted over North Korea’s weekend nuclear test which prompted warnings of US military action.

Sunday’s provocative test sparked heavy selling in Asian stocks Monday and markets were unable to stage any meaningful recovery on Tuesday.

Seoul ended down 0.1 percent after shedding more than one percent the day before, while Tokyo dropped 0.6 percent as exporters were weighed down by the stronger yen.

Hong Kong ended flat and Shanghai, which managed to eke out gains Monday, added 0.1 percent. Wellington retreated but Singapore added 0.4 percent. Sydney finished 0.1 percent higher.

On currency markets the yen extended gains against the dollar as investors sought out safety, while gold held around one-year highs.

Key figures around 0820 GMT

Tokyo — Nikkei 225: Down 0.6 percent at 19,385.81 (close)

Seoul — Kospi: Down 0.1 percent at 2,326.62 (close)

Hong Kong — Hang Seng: Flat at 27,741.35 (close)

Shanghai — Composite: Up 0.1 percent at 3,384.32 (close)

Dollar/yen: Down at 109.40 yen from 109.55 yen

Oil

US oil prices rose on Tuesday and gasoline fell as the gradual restart of refineries in the Gulf of Mexico that were shut by Hurricane Harvey raised demand for crude and eased fears of a fuel supply crunch.

Gasoline futures dropped around 4 percent from their last close, to $1.68 per gallon, down from $2.17 on Aug. 31 and back to levels last seen before Harvey hit the US Gulf Coast and its large refining industry.

US West Texas Intermediate crude futures jumped by almost 3 percent to $48.64 per barrel by 1320 GMT, their highest levels in two weeks, up $1.35 cents from their last settlement.

Texas was edging towards recovery from the devastation of Harvey as shipping channels, oil pipelines and refineries restarted some operations.

Eight US oil refineries with 2.1 million barrels per day of refining capacity, or 11.4 percent of the US total, were shut as of Monday afternoon, the Department of Energy said.

Harvey hit the Texan coast late on Aug 25 and at its peak knocked out almost a quarter of all US refining capacity.

Gold

Gold eased on Tuesday as investors booked profits after the previous session’s rise to a one-year high, though prices remain underpinned by safe-haven demand because of continued concern over North Korea’s nuclear tests.

Spot gold was down 0.2 percent at $1,332.16 an ounce by 1336 GMT, having peaked on Monday at $1,339.47, its highest since late September.

US gold futures were up 0.6 percent at $1,337.80.

“Gold shot up quite a bit in the past few days so if you bought it then you’ve made a nice profit and you could take some off the table,” said Robin Bhar, head of metals research at Societe Generale.

Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares GLD, rose on Friday to help underpin prices. Much of gold’s recent strength can be attributed to the flight to assets perceived as being at less risk from geopolitical uncertainty that has been stoked up by events in the Korean peninsula.