Stock markets lower, gold price continues to rise amid political tensions

USA stock indexes looked set to open lower on Wednesday as investors shunned risky assets following escalating tensions between North Korea and the United States.

Even so, Wall Street remains near record highs.

"It's been a bit of a roller coaster this week, with all the rhetoric between the U.S. and North Korea", said Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management.

The latest United States economic data cemented expectations that inflation will remain subdued amid a robust labour market.

The broad-based S&P 500 dipped to 2,474.92, and the tech-rich Nasdaq Composite Index dropped to 6,370.46. The index had its biggest drop since mid-May a day earlier.

The Dow Jones Industrial Average slid 33.08 (-0.15 percent) to finish at 22,085.34.

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

And with that, the S&P 500's steak of 58 days without a 1% move in either direction came to an end.

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

"I will tell you this, North Korea better get their act together or they're going to be in trouble like few nations ever have been in trouble in this world", Trump said.

Trump suggested in remarks on Thursday that his comments threatening North Korea with "fire and fury" may not have been tough enough.

Gorka denies dismissing Tillerson's role on North Korea
Defense Secretary James Mattis on Thursday appeared to downplay the possibility of armed conflict. In response, North Korea announced it was developing plans for a missile strike against Guam.

Pyongyang has responded that it is eyeing attacks on USA military bases in Guam.

The S&P 500 volatility index, a measure of investor fear, rose for a second day. It's still the highest it's been since May. "The pot is on the stove boiling but no inflation steam is coming out".

Plans are being drawn up and will be ready by the middle of August, North Korea said. Rival Advanced Micro Devices was also down 3.4 percent. Travel-review website operator TripAdvisor was down 7.35 percent. Seagate shares rose 74 cents to $32.29.

Steel, networking, and financial stocks are also seeing notable weakness in mid-day trading, although selling pressure is somewhat subdued. Netflix lost 1.5 per cent.

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. "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". As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 2.192%.

Bond prices were little changed. Silver gained 14 cents to 16.39 an ounce.

Charter Communications rose 2.9 per cent on news Altice is exploring a bid for the cable giant. The euro slid to 1.1752 dollars from 1.1793.

Analysts said media and entertainment stocks also seemed to get caught up in the broader market drop, but emphasized it was often hard to isolate reasons behind specific stocks' movements.

In early trading, France's CAC 40 fell 1.5 percent to 5,141.37 points and Germany's DAX lost 1.2 percent to 12,144.54. The umbrella financials group slipped 0.3 percent.

In Asia, several indexes closed lower overnight. Hong Kong's Hang Seng Index plunged by 2%, while South Korea's Kospi Index slumped by 1.7%. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman were all up, with the Dow Jones U.S. defense index up 1.48 percent at 409.58. Japan was closed on a public holiday.

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